American Chemistry Council (ACC) Weekly Chemistry & Economic Trends report on October 7, 2022 publication shows that data released by the Association of American Railroads chemical railcar loadings were up 1.6% to 30,754 during the week ending 1 October. Loadings were down 0.4% Y/Y (13-week MA), up 3.1% YTD/YTD and have been on the rise for six of the last 13 weeks.
Within the details of the ISM report, the chemical industry was reported to have contracted in September. Chemical producers report as new orders and new export orders slowed, production and employment contracted, and inventories increased. Chemical producers reported the delivery performance of suppliers was slower. The chemical industry was one of 11 industries that reported that customer inventories were “too low”. One chemical industry respondent noted: “Concerns of global economic slowdown are growing, and experiencing some customers pulling back orders.”
Chemical shipments rose 1.2% in August following declines in June and July. There were gains in shipments of coatings & adhesives and other chemicals. Shipments of agricultural chemicals were lower. Chemical inventories continued to expand, up 0.4%, the smallest gain since January. As with shipments, gains in inventories of coatings & adhesives and other chemicals offset declines in agricultural chemicals. Compared to a year ago, shipments were up 4.5% Y/Y while inventories were up 11.8% Y/Y. The inventories to shipments ratio which had increased every month since January, moved lower in August to 1.38. A year ago, the inventories-to-shipments ratio was 1.29.
Sales of chemicals at the wholesale level fell 0.9% in August, giving back gains made in July. Wholesale inventories of chemicals continued to build, up 3.8% on top of a 2.1% gain in August. Compared to a year ago, sales were up 18.1% Y/Y while inventories were ahead 29.1% Y/Y. The inventories-to-sales ratio which had been stuck between 1.07-1.11 since the lockdowns shot up to 1.17, suggesting a growing imbalance.
Chemical industry employment (including pharmaceuticals) grew by 3,400 (0.4%) with gains in both production workers and supervisory/non-production jobs. Compared to a year ago, chemical industry employment was higher by 40,300 (4.6%). Average hourly wages for production workers were up 3.0% Y/Y. With the gain in employment and longer average workweek, the total labor input into the chemical industry was up 1.2% in September, in contrast with the ISM report that suggested that the chemical industry output contracted in September.
Chemicals trade expanded 3% in August to $29.0 billion as exports grew 3% and imports grew 5% over the month. Chemicals exports represent about 10% of all US goods exports and have grown to $122 billion YTD. More than half, 59% of chemical exports are petrochemicals. Nearly a quarter, 24% of chemicals exports are plastic resins. Compared to the same period last year (Jan-Aug), exports are up 21% YTD/YTD. Chemicals imports have grown to $104 billion YTD and are up 27% YTD/YTD. About half of chemicals imports (48%) are petrochemicals. In August, the chemicals trade surplus narrowed slightly to $2.7 billion.
The chemical industry construction spending edged down (-1.2%) in August relative to the month prior. On a year-to-year basis, spending was down 13.4%.
Note On the Color Codes
The banner colors represent observations about the current conditions in the overall economy and the business chemistry. For the overall economy ACC keeps a running tab of 20 indicators. The banner color for the macroeconomic section is determined as follows:
Green – 13 or more positives
Yellow – between 8 and 12 positives
Red – 7 or fewer positives
For the chemical industry there are fewer indicators available. As a result ACC relies upon judgment whether production in the industry (defined as chemicals excluding pharmaceuticals) has increased or decreased three consecutive months.
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