The American Chemistry Council (ACC; Washington, D.C.; www.americanchemistry.com) released its 2016 Year-End Situation and Outlook. Highlights of the Outlook include:
Following a 2.6% gain in 2015, U.S. GDP growth will expand at a 1.6% pace, as weak growth in business investment, combined with an inventory imbalance during the first half of the year. In addition, a challenging trade environment dampened growth prospects. A robust labor market at the end of 2016 sets the stage for continued gains in consumer spending.
Globally, economic headwinds that slowed GDP growth in 2015-16 are subsiding. Global growth of 2.4% in 2016 will strengthen to 2.7% in 2017; trade volumes will also recover.
In the U.S., industrial production was off 0.9% in 2016 as investment and trade stumbled and inventories experienced a rebalancing. Housing and vehicles and related industries remained strong, however. Industrial production will recover in 2017 and accelerate into 2018. Housing starts are expected to continue to accelerate toward their long-term trend through the forecast horizon. The pace of vehicle sales will ease, but will remain at historically high levels.
In contrast to the trend in overall industrial production, the business of American chemistry expanded 0.9% in 2016 despite global headwinds including continued weakness in key export markets and a high dollar. Excluding pharmaceuticals, U.S. chemistry volumes expanded by 1.6%.
In 2017, U.S. chemical production (excluding pharmaceuticals) is expected to rise by 3.6%, followed by a 4.8% growth in 2018, as significant new capacity comes online. During the second half of the decade, U.S. chemistry production is expected to expand at a pace of over 3 percent per year on average, outpacing that of the overall U.S. economy.
Capital investment spending remains strong growing at a 7% annual rate through 2021.
The chemical industry continued to add jobs in 2016, the fourth consecutive year of solid job gains.
Trade surplus in chemistry, excluding pharmaceuticals, expands to more than $70 billion by 2021.
A PDF of the full report can be viewed here.