U.S. chemical manufacturers report their company’s activity level overall (for example, sales, production and output) continued to improve in the second quarter (Q2) of 2024, according to latest findings from the American Chemistry Council’s (ACC; Washington, D.C.; www.americanchemistry.com) Chemical Manufacturing Economic Sentiment Index (ESI). While chemical manufacturers’ sentiment around the state of the global economy deteriorated in Q2, their assessment of the U.S. economy improved. Chemical manufacturers expect improvement in U.S. economic conditions over the second half of 2024 and companies expect the global economy to deteriorate.
“Demand for chemicals in the U.S. continued to improve, which helped lift production and stabilize inventories during Q2,” said Emily Sanchez, Director for Economics and Data Analytics at ACC. “Companies expressed concerns about rising costs on the labor and transportation front and increasing level of regulatory burden as well as a worrisome outlook for the global economy.”
The ACC highlighted the following findings from the Q2 ESI report:
Chemical Demand Improved: Following an increase during Q1, chemical producers reported that the volume of new orders continued to increase in Q2. While orders were up domestically, foreign orders decreased slightly. Looking ahead six months, chemical manufacturers expect higher orders, both domestic and foreign.
Capital Spending Increased: Chemical manufacturers reported increased capital spending for the past four quarters. Looking ahead six months, capital spending is expected to increase, with nearly half of companies expected to expand their capital spending.
Production Costs Higher: After easing in Q1, energy costs (for fuel and power) were reported to be higher in Q2. In addition, transportation and input/raw materials costs continued to rise for a second quarter during Q2, following declines every quarter in 2023. Labor costs also continued to rise in Q2.
Regulatory Burden Continues to Grow: Continuing a troubling trend, many manufacturers (38%) reported their regulatory burden grew in Q2 and more than half (51%) expect it to rise further in the coming six months. These findings track with an earlier regulatory survey ACC conducted that found most companies’ regulatory burden increased across all levels of government, which has hurt their ability to support national priorities and expand production.
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 six quarters of data from Q1 2023 to Q2 2024. The complete findings can be found at the ACC here.