U.S. chemical manufacturers report their company’s activity level overall (e.g., sales, production, output) declined in the third quarter of 2023, according to latest findings from ACC’s Chemical Manufacturing Economic Sentiment Index (ESI). The ESI provides quarterly insights from chemical companies engaged in nearly every aspect of the manufacturing sector and the U.S. economy.
Chemical manufacturers’ sentiment around the state of the economy – US and global – was negative in Q3 and their outlook is for further deterioration over the coming six months. Sentiment around major customer market demand was also negative in Q3. Chemical manufacturers expect demand to recover and their own company’s activity levels to improve over the short-term outlook period. Short-term outlook readings for new orders and production levels were both positive with each reading rising solidly.
Key Findings
- Inventories Down: The volume of order backlogs index continued to decline through Q3. Six months from now, 70% of chemical manufacturers expect the volume of order backlogs to be “about the same” while 28% expect a decrease and 3% expect an increase. Inventories of raw materials were worked down over Q3 as were inventories of finished goods.
- Production Costs Mixed: Following two quarters of decline, energy costs (for fuel and power) rose over Q3 and the ESI reading jumped 39.5 points to 9.5. Input/raw materials costs continued to soften over Q3 though at a decelerated pace.
- Regulations Increased: Manufacturers report facing a growing level of regulatory burden (i.e., compliance and opportunity costs). The Q3 reading for regulatory burden was 54.8 and rises further to 61.0 over the coming six months.
You can view the complete findings here.