U.S. chemical production recorded its fifth straight monthly
gain in May with higher output from all regions barring the West
Coast, according to the latest monthly report from the American
Chemistry Council (ACC). A rebound in manufacturing production -
after being hit by a long and cold winter - contributed to the
The Washington, DC-based chemical industry trade group noted that
the U.S. Chemical Production Regional Index (CPRI) nudged up 0.4%
in May, following a 0.6% increase a month ago.
Created by Moore Economics to track chemical production in seven
regions nationwide, the U.S. CPRI is comparable to Federal
Reserve's industrial production index for chemicals. The CPRI is
measured using a three-month moving average.
The May reading showed continued gain in chemical output in the
Gulf Coast where key building block materials are produced.
Production from this region rose 1% on a monthly comparison basis
in the reported month after a revised 0.7% rise a month ago.
Production edged up 0.2% across Midwest, Southeast and Northeast
while Mid-Atlantic saw a 0.1% gain. Ohio Valley logged a 0.8% gain.
However, output slipped 0.2% in West Coast.
Output from the U.S. manufacturing sector, the largest consumer of
chemical products, went up 0.5% in May on a three-month moving
average basis. The sector is a major driver for the chemical
industry which touches around 96% of manufactured goods.
Manufacturing output bounced back to a healthy gain in the reported
month after slumping unexpectedly in April, thanks to strong
consumer and business demand, especially for cars, industrial
machinery and equipment. The rebound - manifested by a healthy
pickup in factory activities - augurs well for U.S. economic
recovery in the second quarter after a 1% contraction in the first
due to a frigid winter that curbed activities.
Within the manufacturing sector, gains were seen in several
chemistry end-user markets including aerospace, construction
supplies, appliances, motor vehicles, machinery, fabricated metal
products, computers, semiconductors, plastic products, rubber
products, paper and furniture.
As witnessed in April, chemical production was once again mixed
across the segments in the reported month. Gains across
chlor-alkali and other inorganic chemicals, plastic resins,
synthetic rubber, synthetic dyes and pigments, industrial gases,
consumer products and organic chemicals were partly ebbed by
declines in pharmaceuticals, fertilizers, pesticides, synthetic
fibers, coatings and adhesives.
Overall chemical production was up 2.1% year over year in May with
gains recorded across all seven regions. Year to date, output is up
1.4% compared with the year-ago period.
The roughly $770 billion U.S. chemical industry is heavily linked
to the overall condition of the nation's economy. It has been
consistently leading the U.S. economy's business cycle due to its
early position in the supply chain.
The chemical industry had a bumpy ride in 2013 as a weak European
economy, effects of sequestration in the U.S. along with certain
industry-specific challenges led to subdued demand for chemicals
for most of the year. These factors weighed upon the companies in
the chemical space including majors like
While a still-challenging economic backdrop in Europe remains a
roadblock, the chemical industry is expected to fare relatively
better this year, aided by a shale gas boom in the U.S., strength
across agriculture and automotive markets, healthy demand in
emerging geographies, and significant capital investment by
The ACC foresees national chemical production to move up 2.5% in
2014 (up from a 1.6% increase in 2013) and further improve to a
3.5% gain next year, supported by strong agricultural market
fundamentals, healthy demand from light vehicles market and a
revival in the housing market. On the global front, the trade group
projects output to rise 3.8% in 2014 and 4.1% in 2015 with healthy
gains expected across North America and the emerging markets.
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