U.S. chemical production slipped on a monthly basis in July,
affected by uneven factory activity and weak growth in major
export markets, according to the latest monthly report from the
American Chemistry Council (ACC). The Washington-based chemical
industry trade group recently said that the U.S. Chemical
Production Regional Index (CPRI) fell 0.1% in July, following a
revised 0.2% increase a month ago, with output falling across all
The U.S. CPRI, which was created by Moore Economics to track
chemical production in seven regions nationwide, is comparable to
Federal Reserve's industrial production index for chemicals. The
CPRI is measured using a three-month moving average.
Output from the U.S. manufacturing sector, the largest
consumer of chemical products, inched up 1% in July. Within this
sector, output rose in several key chemistry end-user markets
including appliances, construction materials, computers and
electronics, semiconductors, plastic products, rubber products,
textiles and apparel.
The manufacturing sector serves as a barometer to gauge the
overall health of the U.S. economy and is a major driver for the
chemical industry which touches around 96% of manufactured goods.
Irregular factory activity and softness in key export markets
neutralized gains from strong housing activity and consumer
spending during the reported month.
The ACC said that chemical output was mixed across the
segments in July. Production gains across consumer products,
organic chemicals, synthetic rubber, manmade fibers, coatings and
pesticides were masked by declines in industrial gases, inorganic
chemicals, chlor-alkali, synthetic dyes and pigments, plastic
resins, adhesives, fertilizers, and other specialties.
Overall chemical production moved up 1.4% in the reported
month when compared on a year over year basis, following an
upwardly revised 1.2% rise in June. On a region-by-region basis,
production rose across all regions year over year barring West
Coast. Production for the first seven months of 2013, when
compared with the year-ago data, was up 0.8%.
On a monthly comparison basis, July reading showed that
chemical production in the Gulf Coast region, where key building
block materials are produced, fell 0.4%. Midwest, Ohio Valley and
Southeast regions logged declines of 0.2%, 0.3% and 0.3%,
respectively. Production inched down 0.1% across Mid-Atlantic,
Northeast and West Coast regions.
The chemical industry, which is among the biggest industries
in the U.S., is cyclical by nature and heavily linked to the
overall condition of the U.S. economy. The roughly $770 billion
industry has been consistently leading the U.S. economy's
business cycle due to its early position in the supply chain.
Last year, European debt crisis, weak U.S. manufacturing along
with sluggish activity in China and other key emerging markets
weighed on companies in the chemical space including majors such
While lingering crisis in Europe coupled with other
industry-specific challenges continues to pose downside risks,
the global chemical industry is poised for a recovery this year.
Strength across automotive and aerospace and a recovery in the
housing market augur well for the industry.
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