Weekly Chemistry & Economic Trends (December 23, 2022) – American Chemistry Council

Running tab of macro indicators: 7 out of 20

The number of new jobless claims was up by 2,000 to 216,000 during the week ending 17 December. Continued claims were down slightly (by 6,000) to 1.67 million for the week ending 10 December and the insured unemployment rate was 1.2%, unchanged from the previous week’s revised rate.

Consumer spending slowed sharply in November, up just 0.1% following stronger monthly gains over much of the year. After adjusting for inflation, however, consumer spending was flat. Increased spending on services was offset by lower spending on durable goods and a small decline in spending on nondurable goods (including food and gasoline). Personal income continued to move higher (up 0.4%) on a still strong labor market. The price index for personal consumption expenditures (PCE) was up 5.7% Y/Y and the core PCE price index was up 4.7% Y/Y, both measures up sharply. Compared to a year ago, consumer spending was up 2.0% Y/Y while income was off 2.5% (reflecting the removal of generous pandemic fiscal stimulus).

The Conference Board Consumer Confidence Index® rose sharply to 108.3 in December from 101.4 in November. That was the highest reading since April this year and follows two consecutive months of decline. Consumers’ assessment of current business and labor market conditions improved as did their short-term outlook. More consumers think current business conditions are “good” and they think the labor market has become more favorable. Looking forward six months, consumers were mixed about income prospects, less pessimistic about business conditions, and more upbeat about the availability of jobs.

New orders for manufactured durable goods were down 2.1% in November, the biggest month-over-month drop since April 2020. Orders for transportation equipment dropped 6.3% in November. Core business orders (total excluding transportation) rose marginally, by 0.2% in the month. New orders for nondefense capital goods were down 7.6%. New orders for defense capital goods were up 8.0%. New orders were up 6.5% Y/Y. Unfilled orders, which indicate a backlog in production, were just about flat in November and up 6.5% Y/Y.

Led by another big decline in single family starts, housing starts continued to slide for a third consecutive month in November, down 0.5% to a 1.42 million unit seasonally adjusted annual pace. Multifamily starts came in at their highest pace in six months. Forward-looking building permits fell sharply, down by 11.2%. With higher mortgage rates curbing demand, housing starts were off by 16.4% Y/Y, and building permits were down 22.4% Y/Y. Separately, homebuilder confidence fell for a 12th consecutive month, according to the NAHB/Wells Fargo Housing Market Index. The index fell 2 points to 31, the lowest level since 2012 (excluding COVID).

Existing-home sales fell for the tenth consecutive month in November to a seasonally adjusted annual rate (SAAR) of 4.09 million. Sales slipped 7.7% from October and 35.4% from the previous year. Despite soft sales figures, the median home price continued to rise by 3.5% Y/Y to $370,700, which is reflective of a supply-constrained resale market. The inventory of unsold existing homes retreated for the fourth straight month to 1.14 million at the end of November or the equivalent of 3.3 months’ supply at the current monthly sales pace.

The third and final estimate of the third quarter GDP was revised to 3.2% (SAAR) from the previously published estimate of 2.9%. Second quarter GDP was -0.6% (SAAR). The updated estimates primarily reflected upward revisions to consumer spending and nonresidential fixed investment that were partly offset by a downward revision to private inventory investment. In summary, revisions to the GDP estimate indicates a slightly better assessment of the growth in the economy through Q3.

The Conference Board’s Leading Economic Index® continued to move lower for a ninth consecutive month in November, down 1.0%. The Conference Board noted that only four of the 10 components improved. Labor market, manufacturing, and housing indicators all weakened—reflecting serious headwinds to economic growth. The LEI is down 4.5% Y/Y. The Conference Board projects that a US recession is likely to start around the beginning of 2023 and last through mid-year, consistent with ACC’s outlook published earlier this month.

While prices for natural gas rose earlier in the week in anticipation of extremely cold temperatures from the Arctic bomb cyclone, prices eased later in the week on expected milder temperatures going into the last week of the year and early-2023. Oil prices, which were lower earlier in the week on concerns that China’s Covid outbreak will curb oil demand, were boosted on a larger than expected draw of U.S. crude oil inventories. The combined oil and gas rig count fell by four to 774 during the week ending December 17th. 

For the business of chemistry, the indicators bring to mind a red banner for basic and specialty chemicals.

According to data released by the Association of American Railroads, chemical railcar loadings were up for a third consecutive week to 31,342 for the week ending 17 December. Loadings were down 8.2% Y/Y (13-week MA), up (0.5%) YTD/YTD and have been on the rise for seven of the last 13 weeks. 

The U.S. Chemical Production Regional Index (U.S. CPRI) fell by 0.4% in November following declines of 0.4% in September and 0.3% in October, according to ACC. Chemical output was lower than a month ago in all regions. The U.S. CPRI is measured as a three-month moving average (3MMA). Compared with a year ago, total U.S. chemical production was essentially unchanged (up 0.1%). Chemical production was higher than a year ago in all regions, except the Gulf Coast.

On a 3MMA basis, chemical production within segments was mixed in November. There were gains in the production of coatings, adhesives, and other specialty chemicals; industrial gases; synthetic dyes and pigments; and other inorganic chemicals. These gains were offset by lower production of plastic resins; organic chemicals; synthetic rubber; manufactured fibers; consumer products; fertilizers and crop protection chemicals.

As nearly all manufactured goods are produced using chemistry in some form, manufacturing activity is an important indicator for chemical demand. Manufacturing output was flat in November on a 3MMA basis. The 3MMA trend in manufacturing production was mixed, with gains in the output of food & beverages, appliances, motor vehicles, aerospace, fabricated metal products, machinery, computers & electronics, foundries, rubber products, printing and apparel.

Note On the Color Codes

The banner colors represent observations about the current conditions in the overall economy and the business chemistry. For the overall economy we keep a running tab of 20 indicators. The banner color for the macroeconomic section is determined as follows:

Green – 13 or more positives
Yellow – between 8 and 12 positives
Red – 7 or fewer positives

For the chemical industry there are fewer indicators available. As a result we rely upon judgment whether production in the industry (defined as chemicals excluding pharmaceuticals) has increased or decreased three consecutive months.

For More Information

ACC members can access additional data, economic analyses, presentations, outlooks, and weekly economic updates through MemberExchange.

In addition to this weekly report, ACC offers numerous other economic data that cover worldwide production, trade, shipments, inventories, price indices, energy, employment, investment, R&D, EH&S, financial performance measures, macroeconomic data, plus much more. To order, visit http://store.americanchemistry.com/.

Every effort has been made in the preparation of this weekly report to provide the best available information and analysis. However, neither the American Chemistry Council, nor any of its employees, agents or other assigns makes any warranty, expressed or implied, or assumes any liability or responsibility for any use, or the results of such use, of any information or data disclosed in this material.

Contact us at ACC_EconomicsDepartment@americanchemistry.com

Source: news.google.com