The article titled “Weekly Chemistry and Economic Trends (February 7, 2025)” published by the American Chemistry Council presents an in-depth analysis of the prevailing economic and chemical industry trends within the United States and on a global scale. Drawing from a range of macroeconomic indicators and detailed industry-specific data, the article comprehensively examines the state of economic activity, job market fluctuations, trade balances, manufacturing performance, energy prices, and key movements in the chemical industry.
Macroeconomic Overview
Positive Movement in Macroeconomic Indicators
The report begins with an overview of macroeconomic indicators, where 14 out of 20 indicators signal positive movement. A sharp rise in new jobless claims has been noted, with an increase of 11,000 to 219,000 by the week ending February 1. Meanwhile, continuing claims grew by 36,000, bringing the total to 1.886 million, though the insured unemployment rate remained stable at 1.2%. Nonfarm payrolls rose by 143,000 in January, though this represents a significant slowdown compared to the 307,000 gain seen in December. Gains in manufacturing and construction employment were observed, as well as an increase in services employment excluding business and professional services.
Employment and Earnings Trends
Average hourly earnings increased year-over-year by 4.1%, maintaining the growth rate seen in the previous month. The unemployment rate decreased slightly to 4.0% from December’s 4.1%. Despite concerns about external shocks like the California wildfires and severe winter weather, the Bureau of Labor Statistics (BLS) confirmed these events had no notable impact on the data. Additionally, there were downward revisions to previous estimates. The number of job openings fell to 7.6 million in December, marking a decline of 556,000 from November and a decrease of 1.3 million year-over-year. The ratio of job openings to unemployed persons also fell to 1.1, down from 1.4 in December 2023.
Labor Market Conditions
Job Openings and Quits Rate
The quits rate, reflecting employees’ willingness to leave their jobs, remained unchanged, indicating stable labor market confidence. The labor market conditions reflect a mixed scenario with stable confidence but a notable decline in job openings. External factors like the California wildfires and severe winter weather were confirmed by the BLS to have no significant impact on the data. Additionally, there were downward revisions to previous estimates.
Revisions and External Factors
The U.S. trade deficit in goods and services soared to $98.4 billion in December, a 24.7% increase driven by higher imports and reduced exports. For the entire year, the goods and services deficit rose by $133.5 billion (17.0%), with exports growing by $119.8 billion (3.9%) and imports by $253.3 billion (6.6%). The goods deficit in December reached a record high of $123.0 billion. In contrast, construction spending grew by 0.5% in December, bolstered by strong investment in private residential projects, particularly single-family homes and improvements.
Trade and Construction Trends
Trade Deficit and Export-Import Dynamics
Spending on privately funded nonresidential projects also saw gains, albeit slightly, led by commercial developments. However, public construction spending declined for the second consecutive month, but overall construction spending still rose by 4.3% year-over-year. Following 26 consecutive months of contraction, the ISM Manufacturing PMI® increased by 1.7 points to 50.9% in January, indicating expansion. This growth was attributed to gains in new orders, production, and employment, although order backlogs and raw material inventories continued to decline.
Construction Spending Patterns
Eight industries, including chemicals, textiles, primary metals, petroleum products, machinery, transportation equipment, rubber & plastic products, and electrical equipment & appliances, reported growth. Industry comments highlighted better-than-expected orders and cautious optimism for recovery in goods demand. On a global scale, the JP Morgan Global Manufacturing PMI® indicated slight expansion with a rise to 50.1%, driven by increases in new orders, output, and future output expectations, though export orders and employment continued to decline.
Manufacturing Sector Performance
ISM Manufacturing PMI® and Industry Growth
Factory orders in December declined by 0.9% with durable goods orders (which account for about half of all orders) falling by 2.2%. Orders for transportation equipment were particularly hit, primarily due to a decrease in non-defense aircraft orders. Conversely, orders for motor vehicles and IT equipment showed a modest increase. Annual factory orders decreased by 1.1%, and unfilled orders, representing the manufacturing pipeline, also fell by 0.5%. Manufacturing shipments rose by 0.6% while inventories increased by 0.4%, leading to a slight reduction in the inventories-to-shipments ratio from 1.48 to 1.46.
Global Manufacturing Trends
On a year-over-year basis, shipments were up by 1.9% and inventories by 0.8%. Wholesale inventories slightly decreased by 0.5% in December and were down by 0.1% year-over-year. Wholesale sales increased by 1.0%, making the inventories-to-sales ratio drop to 1.31 from 1.35 in December 2023. A notable decrease in light vehicle sales occurred, with a seasonally adjusted annual rate of 15.6 million in January, impacted partially by harsh winter conditions. The services sector continued to expand in January, indicated by a decline in the ISM Services PMI® by 1.2 points to 52.8.
Factory Orders and Shipments
Decline in Factory Orders
Despite the slowdown, fourteen industries reported growth. Business activity, production, and new orders rose at slower rates, while employment saw an uptick. Inventory contraction continued, with imports down and new export orders on the rise. Order backlogs contracted, and inventory sentiment remained high. Oil prices faced setbacks due to additional US sanctions on Iranian oil exports to China. Contrarily, US natural gas prices increased due to a colder weather forecast. The combined oil and gas rig count improved slightly, reflecting a rise by six to a total of 577 rigs after three weeks of decline. According to the Association of American Railroads’ data, chemical railcar loadings increased to 33,374 for the week ending February 1, with a 4.8% year-over-year increase.
Shipments and Inventory Dynamics
The ISM Manufacturing PMI® reported expansion in the chemical industry, with increases in new orders, production, export orders, and employment but declines in inventories, imports, and order backlogs. A chemical industry respondent highlighted improved customer orders and relief from the non-occurrence of an International Longshoremen’s Association strike. Chemical industry construction spending climbed by 1.7% in December to a seasonally adjusted annual rate of $40.4 billion, up 17.0% year-over-year. Overall, chemical industry construction accounted for 17% of total manufacturing construction spending. ACC’s Global Chemical Production Regional Index (Global CPRI) ended 2024 with a 1.1% increase, benefiting from gains in North America and Asia.
Wholesale Dynamics and Light Vehicle Sales
Wholesale Inventories and Sales
Specifically, US production rose by 1.2%, driven by stronger new orders and export demand. The global chemical production growth reached 4.2% year-over-year, with US Chemical Production Regional Index (U.S. CPRI) seeing a 1.2% increase in December and 3.1% year-over-year. Chemical shipments slightly declined by 0.1%, with decreases in agricultural chemicals and coatings and adhesives offsetting slight rises in other chemical categories. Chemical inventories slightly eased, down by 0.2%, while the inventories-to-sales ratio remained unchanged at 1.17. Chemical industry jobs rose by 0.2% in December to 550,600, reflecting a 0.8% year-over-year increase.
Light Vehicle Sales and Service Sector
However, employment in plastic resin manufacturing saw a minor decline of 0.2% to 61,100, a 0.5% drop year-over-year. Combining chemical and pharmaceutical jobs, employment in December edged up to 902,300, led by gains in production worker numbers. Average hourly wages rose by 3.2% year-over-year, although the average workweek decreased to 41.2 hours, revealing a contraction in labor input for the chemical and pharmaceutical industries, diverging from the ISM Manufacturing PMI® which suggested higher chemical employment.
Conclusion
The article titled “Weekly Chemistry and Economic Trends (February 7, 2025)” from the American Chemistry Council provides a thorough analysis of the current economic and chemical industry trends both in the United States and globally. Utilizing a wide array of macroeconomic indicators alongside specific industry data, the article offers a detailed examination of economic activity. It covers job market fluctuations, trade balances, and manufacturing performance, giving a clear picture of the state of these sectors. The analysis also delves into energy prices and monitors significant movements within the chemical industry.
Additionally, the article features insights into the factors driving these trends, elucidating on the impact of global events, policy changes, and technological advancements. By correlating these factors with observed data, the report gives readers a comprehensive understanding of the complex interplay affecting both the economy and the chemical sector. This detailed overview caters to industry professionals and economists alike, offering valuable information for strategic planning and forecasting.
