US housing weakens again

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The above chart comes from Kevin Swift’s weekly report for the American Chemistry Council. Sadly, it paints a downbeat picture for the near-term outlook for the US chemical industry. It shows that US housing starts fell a further 0.6% in February, whilst building permits fell 7.8%.

Housing starts are now down 28% versus a year ago, and building permits are down 37%. In absolute terms, they are back to 1990 levels, and still falling. This is very bad news, as housing is a key market for the chemical industry, with each new home requiring $16k of chemicals.

The only bright spot for US producers is that they have been able to compensate for this domestic decline via increased exports. As I noted last week, the US $ is now back at 1971 levels on a trade-weighted basis. The report shows rail car loadings are now up 3.4% versus last year as a result. But I doubt that these levels of exports are sustainable. Asian and European markets are probably already slowing themselves, now the US has moved into recession.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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