Overall economic sentiment for U.S. chemical manufacturers moved up in Q4 2025, even as business conditions remain challenging on several fronts, according to the American Chemistry Council’s (ACC) latest Chemical Manufacturing Economic Sentiment Index (ESI). Despite key indicators remaining in negative territory, the contractions in Q4 were smaller than in the previous quarter, signaling a relative improvement in activity. Moreover, optimism grew even faster than in Q3, as companies look ahead to the first half of 2026.
ACC’s index, based on companies’ assessment of their activity level overall (e.g., sales, production, and output) declined slightly in Q4, even as chemical manufacturers reported demand in major customer markets, new orders, order backlogs, production, and U.S. and global economic conditions declined by less than in Q3. Moreover, capital spending increased after having contracted the previous three quarters.
“Chemical manufacturing activity contracted in Q4 but there were broad-based relative improvements in many areas,” said Diego Saltes, ACC’s Director of Economics and Data Analytics. “After business conditions plunged in Q3, most benchmarks began to move in the right direction.”
“Chemical manufacturers are still facing several challenges, as production costs continued to increase, and in some cases accelerate, especially for energy and raw materials. Companies’ employee headcount declined notably, as the availability of skilled labor became less plentiful.”
“Heavy destocking of finished goods and raw materials moderated in Q4, while the regulatory burden declined,” Saltes added.
“Despite persistent challenges, several key expectations indexes witnessed steep increases in Q4, particularly new orders, production levels, overall company activity, and capacity utilization, laying the ground for better times ahead over the next six months,” Saltes concluded.