09 August 2011 22:07 [Source: ICIS news]
HOUSTON (ICIS)--The American Chemistry Council (ACC) has increased the chance of the US slipping back into a recession to one in three, up from one in four in July, the chemical trade group said on Tuesday.
Softness in the manufacturing industry, the weakening of export markets and the Purchasing Managers’ Index growing at a slower rate are all signs that a recession may be on the horizon, said ACC economist Martha Moore.
“[Harvard economist Martin] Feldstein gave us a one in two chance,” Moore said. “So there is a lot of concern out there.”
Regardless, Moore said the ACC’s forecast for the chemicals industry is for continued growth, albeit at a slower pace.
Unlike much of the world, the US uses ethane instead of naphtha as a feedstock.
“Export markets are softening,” she said. “But it’s nothing too dramatic.”
Meanwhile, the US Federal Reserve Board on Tuesday announced it would keep interest rates at historic lows for at least two years in order to boost consumer and market confidence in the wake of economic uncertainty.
“The Fed was very discouraged at the pace of economic growth, so they had to keep the rates low,” Moore said. “They weren’t in the position to raise rates.”
Additional reporting by Joe Kamalick
Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
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