Weak US retail sales could impact PE

11 May 2007 21:52  [Source: ICIS news]

HOUSTON (ICIS news)--Falling retail sales could affect polyethylene that retailers use for packaging, according to a report released on Friday by the American Chemistry Council.

Many retailers, such as Wal-Mart, reported year-on-year drops in comparable-store sales.

Overall, April retail sales rose 2.6% from the same time last year, according to the National Retail Federation. When adjusted for seasonal variation, April sales dropped 0.5% from March.

Retail sales are important because they often correspond to consumption of polyethylene resins, which are used in packaging, according to the council.

"There is a significant amount of plastic resins that walk out of Wal-Mart's doors everyday," said Kevin Swift, ACC chief economist.

Global manufacturers could be more affected by retail figures, since US companies import much of their packaging, Swift said.

US consumer spending is slowing down because of rising gasoline prices and falling house sales, said David Huether, chief economist for the National Association of Manufacturers, a 14,0000 member trade group that includes many US chemical and plastics manufacturers.

As a whole, manufacturers should still see modest growth in the upcoming months, he said.

However, companies that export goods likely will perform better than those that rely on consumer spending or on housing, Huether said. "The sectors in manufacturing that are related to housing are really taking it on the chin."

By: Al Greenwood
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