MACROECONOMY & END-USE MARKETS
Running tab of macro indicators: 16 out of 20
The number of new jobless claims rose by 20,000 to 332,000 during the week ending 11 September, but remained near pandemic lows. Continuing claims declined by 187,000 to 2.67 million and the insured unemployment rate for the week ending 4 September fell by 0.2 points to 1.9%.
Despite concerns that the Delta variant would curb spending, retail sales rose by 0.7% in August as the back-to-school shopping season boosted activity. Reflecting continued disruptions due to the semiconductor shortage, sales of motor vehicles and parts fell 3.6%, but core retail sales rose by 2.0%. The largest gains were in general merchandise stores, furniture stores, grocery stores, and online platforms. Compared to a year ago, retail sales were up 15.1%.
With gains across the supply chain, combined business inventories rose by 0.5% in July, following a 0.9% gain in June. Combined business sales also rose by 0.5%. Sales were up 16.3% Y/Y while inventories were up 7.2% Y/Y. Compared to June, the inventories-to-sales ratio remained steady at 1.25 suggesting inventories remain historically lean.
The NFIB index of small business optimism improved slightly in August, increasing 0.4 points to 100.1. This improvement was above expectations. Five of the 10 components improved, four decreased and one was unchanged. The highest increases were registered in the share of owners who plan to increase employment, inventories, and capital outlays. The short-term outlook, however, dimmed.
The consumer price index increased 0.3% in August indicating an easing of inflationary pressures. Over the last 12 months, the CPI has increased 5.3%. The 0.3% gain in August reflects higher prices for gasoline, household furnishings and operations, new cars, recreation, medical care, food, and shelter. Less food and energy, core-CPI rose 0.1% in August and has risen 4.0% over the past 12 months. Import prices eased in August, down 0.3%, the first monthly decline since October 2020. Prices for imported fuels declined and nonfuel import prices also ticked lower. Compared to a year ago, import prices were up 9.0% Y/Y.
Industrial production rose by 0.4% in August. Compared to a year ago, industrial production was higher by 5.9%. Capacity utilization rose by 0.2 points to 76.4%. Manufacturing production edged higher, but within manufacturing results were mixed. In addition to declines in electrical equipment & appliances, textiles, and machinery, output in hurricane-sensitive manufacturing sectors (including oil & gas extraction, refining and chemicals) declined. There were offsetting gains in several segments, including computers & electronics, furniture, and paper. A year ago, capacity utilization was 72.3%. Overall industrial capacity was higher by 0.2% Y/Y.
ENERGY
The rig count rose by six to 502 rigs during the week ending 10 September. Energy prices were sharply higher this week in response to hurricane-related disruptions to oil and gas production. As of Thursday, 28% of oil production and 39% of natural gas production remained offline in the Gulf of Mexico. In addition, demand for natural gas continues to be high, especially in Europe.
CHEMICALS
For the business of chemistry, the indicators still bring to mind a green banner for basic and specialty chemicals.
Reflecting continued disruptions from Hurricane Ida, data from the Association of American Railroads show that chemical railcar loadings fell by 2.9% to 29,907 railcars during the week ending 11 September (week 36). Loadings were up 2.3% Y/Y and up 5.9% YTD/YTD. The 13-week moving average, which is used to smooth out volatility, was up 7.1%.
Reflecting outages related to Hurricane Ida, chemical production fell 1.4% in August. Declines were largely centered in organic and inorganic chemicals and synthetic materials. Output of coatings, adhesives, other specialty chemicals, agricultural chemicals, and consumer products were higher. Compared to a year ago, chemical output was up 3.3%. U.S. chemical capacity utilization fell by 1.2 points to 82.2%.
Chemical import prices rose by 1.0% in August, the 15th consecutive increase. Chemical export prices also continued to move higher, up by 0.4%. Compared to a year ago, import prices were up 21.8% while export prices were up 27.3% Y/Y.
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.
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Upcoming Events of Interest
Hydrocarbon Processing IRPC Operations Virtual Event
Hydrocarbon Processing/Gulf Energy Information
21-22 September 2021
https://web.cvent.com/event/ec87ac54-5d81-48f7-a4db-c7f82f1c4e73/summary
“Economic, Energy and Chemical Industry Trends and Outlook” Webinar
Dr. Kevin Swift, Chief Economist | American Chemistry Council
12:00 – 2:00 pm | 22 September 2021
Société de Chimie Industrielle
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“Hexion: Sharpening Innovation for Growth” Webinar
Craig Rogerson - Chairman, President & CEO | Hexion
11:00 am | 23 September 2021
CME - Chemical Marketing & Economics
www.cme-stem.org
“Shocks, Shifts, and Emerging Economic Landscape”
63rd NABE Annual Meeting
26-28 September 2021
Marriott Crystal Gateway | Arlington, VA
National Association for Business Economics (NABE)
www.nabe.com
“The Evolving Impact of ESG on the Chemical Industry” Webinar
Joseph Chang - Global Editor | ICIS Chemical Business; Robert Westervelt - Editor-in-Chief | IHS Chemical Week; and Peter Young - CEO & Managing Director | Young & Partners
1:00 – 2:15 pm | 29 September 2021
Société de Chimie Industrielle
www.societe.org
