21 March 2008 17:03 [Source: ICIS news]
Kevin Swift, chief economist for the American Chemistry Council (ACC), said that the latest hard economic data “all point to recession”.
“Housing activity continues to fall and will likely fall further as builders need to reduce inventories,” Swift said in his weekly review of economic trends.
“Industrial production fell during February and the regional survey points to continued weakness in March,” he noted.
“All four of the measures used by the NBER Data Committee to determine business cycle peaks and troughs are in decline,” he added, referring to the National Bureau of Economic Research, the widely respected non-profit business and commerce analytical group.
The four key measures cited by the bureau are personal income, which peaked in September; employment, down since December; industrial production, in decline since January; and manufacturing and wholesale-retail sales, down from a peak in November.
The decline in those four measures “is consistent with a recession”, Swift said.
In addition, he noted, the Conference Board’s index of leading economic indicators has declined for the fifth consecutive month, “which also is consistent with past recessions”.
“Inflation at the producer level remains elevated and underlying trends have intensified as a result of the weakness in the dollar and the commodities boom,” Swift said. “This suggests adverse implications for corporate profit margins and consumer purchasing power.”
In the chemicals industry, Swift said that overall production slipped in February, and with the exception of pharmaceuticals, the sector’s output has been soft for several months.
However, Swift noted that often by the time a US economic recession is officially recognised by NBER and other conservative analysts, the recession has probably been in play for some time and may already be ending.
For example, he cited the 13-week moving average of railcar loadings of chemical products, “which indicates recent improving activity”. The 13-week railcar loadings for chemicals, regarded as a more reliable indicator than the weekly loadings numbers, is up 3.4% over the same 13-week period of 2007.
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