26 July 2012 16:24 [Source: ICIS news]
By Joe Kamalick
WASHINGTON (ICIS)--On the eve of a crucial ?xml:namespace>
The American Chemistry Council (ACC) reported this week that its new measure of
Because the chemicals industry is at the top end of the supply chain and feeds a wide spectrum of other downstream manufacturers and industrial consumer sectors, its bellwether caution for near-term performance bodes ill for the overall economy.
On Friday this week, the Commerce Department will issue its first estimate of
Most economists, including those at the US Federal Reserve Board, think Friday's GDP report will show a further slowing of economic development, well below the first quarter’s anemic 1.9% rate and perhaps as low as 1%.
That forlorn outlook is reflected in chemical sector data.
But that is not cheering news.
“July data continue to suggest that broader
Slowing export activity could have disproportionate impact on the overall
Consequently, a decline in export trade could cut the legs out from under the already wobbly
The council also noted that a three-month moving average for the chemical activity barometer declined in July, further suggesting “muted growth prospects in the months ahead”.
The CAB combines data from a range of chemicals and sub-sectors including the production of chlorine and other alkalies, pigments, plastic resins and other basic industrial chemicals.
The barometer also factors in chemical company stock data, hours worked in chemicals manufacturing, and publicly available chemicals pricing and inventories. Broader data sets, such as housing starts and new orders for general manufactured goods, also are included, according to the ACC.
“The chemical industry has been found to consistently lead the
Although the CAB flat-lined in July, the three straight months of decline in the measure leading up to July are “historically a sign of slowing economic activity”, the council said.
Applied retroactively, the CAB was at 90.3 in March, fell to 90 in April, then to 89.4 in May and to 88.5 in June.
The council’s broader outlook for declining
ACC said that
The council said that the slight decline in its Chemical Production Regional Index (CPRI) for June followed a downwardly revised drop of 0.5% in May from April.
The fall-off in chemicals output was concentrated in four major
The council said that flat production in the other three regions – the
However, compared with the same month in 2011, June’s US chemicals output was still up by 0.3%, the council said.
On a year-to-date basis, chemicals production in the first six months of this year was up by 0.2% compared with the first half of 2011.
But those narrow year-to-year gains might not be enough to weather the gathering storm of overall weaker US and global economic performance.
The continuing weak economic data reflected in the CAB echo multiple other recent reports indicating that the
US business economists also reported that they expect the nation’s economy to weaken in the second half, and the International Monetary Fund (IMF) warned that the euro crisis has reached a new and critical stage.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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