US retail sales could add more pressure to chems

16 November 2007 21:55  [Source: ICIS news]

HOUSTON (ICIS news)--US retail sales could soften as higher energy prices and tighter credit lower consumer spending, a trend that could drag down demand for packaging and other downstream markets for chemicals, a trade group said on Friday.

US industrial production is also showing signs of stress, according to a weekly economics report from the American Chemistry Council (ACC).

Chemical activity dropped in October, along with overall industrial production, the report said.

"On balance, the start to the fourth quarter appears to be rather tepid," chief ACC economist Kevin Swift wrote in the report.

In addition, the economic outlook for 2008 became more pessimistic, according to the council's survey of economists. The survey is an average of the economists' forecasts.

In particular, the forecast for 2008 housing starts fell sharply, indicating that the bottom of the housing cycle is nowhere in sight, the report said.

Housing is important to the chemical industry, since each new house consumes an average of $16,000 (€11,000) in chemistry, the council said.

Forecast year-over-year changes in US economic indicators

	2005	2006	2007	2008	2009
GDP	3.1	2.9	2.1	2.4	3.0
Consumer spending	3.2	3.1	2.9	2.1	2.8
Industrial production	3.2	4.1	2.0	2.6	3.2
Light vehicle sales	17.0m	16.5m	16.1m	16.0m	16.3m
Housing starts	2.07m	1.80m	1.36m	1.16m	1.41m
Consumer prices	3.4	3.3	2.8	2.5	2.3
Unemployment rate	5.1	4.6	4.6	5.0	4.9

source: ACC

($1.00 = €0.68)

By: Al Greenwood
+1 713 525 2653

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