US chemicals output rises 0.2% in Oct, but down year on year

28 November 2012 18:26  [Source: ICIS news]

WASHINGTON (ICIS)--US chemical production rose by 0.2% in October from September, the American Chemistry Council (ACC) said on Wednesday, but the three-month moving average and year-earlier comparisons show declines.

In its monthly report, the council said that its US chemical production regional index (CPRI) showed a 0.2% gain last month, following an upwardly revised 0.3% advance in September.

There was strong growth in chemicals manufacturing in the Gulf Coast region, up by 0.5% in October, and in the Ohio Valley sector, where the month’s gain was 0.6%.

But those advances were almost wholly offset by declines of 0.1% or 0.2% in three of the seven regions tracked by the ACC, including the West Coast, Northeast and the Mid-Atlantic areas. Other regions had narrow 0.1% gains.

However, based on the CPRI’s three-month moving average, the nation’s chemicals producers saw output decline by 0.5% in October, a somewhat sharper downturn than September’s 0.2% drop.

The council’s report indicated that the two-month decline in the moving average was likely attributable to weakness in overall US manufacturing industries, a key downstream consuming sector for chemicals and resins.

“Manufacturing continues to weaken as investment drops ahead of uncertainty about the resolution of the fiscal cliff,” the council said. 

The so-called “fiscal cliff” is the increase in US income tax rates and sharp cuts in federal government spending that are to kick in on 1 January. 

The rate increases and spending cuts are mandatory, unless the White House and Congress can engineer a budget resolution in the next few weeks to eliminate most, if not all, of the mandated tax hikes and spending reductions.

Many manufacturers have indicated that they are unwilling to make capital investments in plants and equipment or increase hiring until they can be sure of what their tax liabilities will be in the new year.

In addition, the council report said that compared with the same month of 2011, October’s chemicals production was down by 0.2% and followed a 0.2% year-to-year drop in September.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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