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ACC: Chemical manufacturing levels ‘deteriorate’ in Q4

Jan. 31, 2024
Overall activity in the sector, including sales, production, and output, decreased in late 2023, but U.S. chemical manufacturers’ outlook is improving, according to new report

U.S. chemical manufacturers’ overall activity level, including sales, production, and output, deteriorated in the fourth quarter of 2023, according to latest findings from the American Chemistry Council’s Chemical Manufacturing Economic Sentiment Index (ESI).

While chemical manufacturers’ sentiment around the state of the economy, including in the U.S. and globally, remained negative in Q4, their outlook is for improvement over the coming six months, ACC added. Chemical manufacturers expect demand to recover and their own companies’ activity levels to improve in the short term.

Among the key findings in the report:

  • Demand weakened: New orders for U.S. chemicals declined in Q4. Orders were down for both domestic orders and exports. Over Q4, about half (53%) of chemical manufacturers reported the volume of new orders decreased. Looking ahead six months, chemical manufacturers anticipate gains in the volume of both domestic and foreign orders.
  • Production costs mixed: Following an uptick in Q3, energy costs (for fuel and power) eased in Q4, and the ESI reading dropped 26.9 points to -17.4. Input/raw materials costs continued to soften over Q4, though at a decelerated pace. Transportation costs declined over every quarter in 2023. Labor costs rose over every quarter in 2023.
  • Regulatory burden increased: Many manufacturers (43%) report their regulatory burden grew in Q4 and even more (55%) expect it to rise further in the coming six months.

The ESI provides quarterly insights from chemical companies engaged in nearly every aspect of the manufacturing sector and the U.S. economy.