U.S. chemical manufacturers report their company’s activity level overall (e.g., sales, production, output) continued to improve in the third quarter (Q3) of 2024, according to latest findings from the American Chemistry Council’s (ACC) Chemical Manufacturing Economic Sentiment Index (ESI).
While chemical manufacturers’ sentiment around the state of the global economy deteriorated in Q3, their assessment of the U.S. economy improved. Chemical manufacturers expect improvement in U.S. economic conditions over the remainder of 2024 and into 2025. However, they expect weakness in the global economy to continue.
“Chemical manufacturers reported gains in activity in every quarter this year. We’re seeing some deceleration in some of the key ESI index readings, however,” said Emily Sanchez, Director for Economics and Data Analytics at ACC.
“Based on feedback from chemical manufacturers regarding customer demand and broader conditions, our understanding is that the economic situation and outlook is mostly stable, particularly as it relates to domestic business,” she continued. “Looking ahead six months, chemical manufacturers are optimistic about their business, customer demand overall, and the U.S. economy. They are less optimistic about the global economy in the months ahead.”
Highlights from the 3Q ESI Report:
• Chemical Demand Deteriorated: Following gains in Q1 and Q2, chemical producers reported that the volume of new orders declined in Q3. While orders were up domestically, foreign orders decreased. In the next six months chemical manufacturers expect an increase in orders, both domestic and foreign.
• Capital Spending Rises: Once again chemical manufacturers reported increased capital spending, which has been on the rise for the past five quarters. Looking ahead, capital spending is expected to grow over the next six months, with over half of companies expected to expand their capital spending.
• Most Production Costs Higher but Coming Down: Aside from energy costs (for fuel and power) which were reported to be lower in Q3, production costs continued to increase. Labor, transportation and input/raw materials costs continued to rise for a third quarter during Q3, however, the production costs trend is decelerating.
• Regulatory Burden Continues to Build: Signaling a stubborn trend, 38% of manufacturers reported an increase in their regulatory burden in Q3, with more than half (63%) expecting it to grow even more over the next six months.
The ESI provides quarterly insights from chemical companies engaged in nearly every aspect of the manufacturing sector and the U.S. economy. This latest report builds on over seven quarters of data from Q1 2023 to Q3 2024. You can view the complete findings here.
