Consumer sentiment declined sharply in January, dropping 9.7 points to 84.5—the lowest level since May 2014 and even below readings seen during the peak of the pandemic. All five components of the index weakened, with Gen X expressing the least confidence and Gen Z showing relatively stronger optimism. Intentions to purchase major consumer goods such as appliances, furniture, and electronics weakened, and expectations for home buying also dipped.
Advance durable goods orders surged 5.3% in November after a revised 2.1% drop in October. The increase was largely driven by a near doubling of civilian aircraft orders, with gains also seen in communications equipment, machinery, fabricated metals, and electrical products. However, motor vehicle and parts orders declined for the second consecutive month, falling 0.5%. Core capital goods orders—excluding defense and aircraft—rose 0.7%, marking the fifth straight monthly gain. Year-over-year, headline durable goods orders were up 10.5%, while core orders increased 4.1%.
Factory orders overall rose 2.7% in November, supported by durable goods, while nondurable goods orders remained flat. Higher demand was observed for civilian aircraft, IT equipment, computers, and construction materials. Conversely, orders for motor vehicles, defense capital goods, and consumer goods declined. Unfilled orders rose 1.4%, the largest monthly increase since May, while both shipments and inventories edged up 0.1%, leaving the inventories-to-sales ratio unchanged at 1.56.
The Dallas Fed’s General Business Activity index improved by 10.1 points to -1.2 in January, indicating a slower pace of contraction in Texas manufacturing. Production, new orders, employment, and shipments all shifted from contraction to expansion. Six-month forward-looking expectations showed modest improvement.
The Federal Open Market Committee maintained interest rates in the 3.5%–3.75% range, following three rate cuts between September and December. Two governors dissented, advocating for an additional 25 basis-point reduction. The decision was justified by solid economic growth, persistent inflation, and a stabilizing labor market. The FOMC emphasized the need to assess prior policy changes amid ongoing economic uncertainty.
Producer prices increased 0.5% in December, led by higher margins in final demand services. Final demand goods prices were flat after a 0.8% rise in November. Prices for nonferrous metals, natural gas, motor vehicles, and aircraft equipment rose, while declines in diesel, gasoline, jet fuel, beef, and iron & steel scrap offset some gains. Year-over-year, producer prices were up 3.0%, with core prices (excluding food and energy) rising 3.5%, unchanged from November.
Wholesale inventories rose 0.2% in November, matching October’s gain. The largest increases were in electrical equipment, pharmaceuticals, and miscellaneous durable goods, while furniture, paper, and lumber inventories declined. Wholesale sales jumped 1.3%, led by apparel, petroleum, and computer equipment. Grocery, lumber, and durable goods sales fell. Compared to the prior year, sales were up 5.2%, inventories rose 1.8%, and the inventories-to-sales ratio fell to 1.28 from 1.30.
The U.S. trade deficit widened by $27.6 billion to $56.8 billion in November. Imports grew 5.0% while exports dropped 3.6%. Exports of industrial supplies—including crude oil and precious metals—and consumer goods like pharmaceuticals declined. Meanwhile, imports of consumer goods and capital goods such as semiconductors and computers rose.
Chemical manufacturing activity contracted in the fourth quarter, according to the American Chemistry Council’s sentiment index. While overall company activity worsened slightly, several indicators improved: new orders (domestic and foreign), production levels, customer demand, backlogs, and capital spending—which shifted from contraction to slight expansion. However, raw material and energy costs rose sharply, and employment declined significantly. Looking ahead, companies anticipate stronger demand but expect continued cost pressures, especially in labor.
Chemical railcar loadings reached 33,773 for the week ending January 24, flat on a 13-week moving average but up 7.0% year-to-date.
One industry respondent noted ongoing uncertainty in durable goods, construction, and automotive sectors, though falling interest rates offer hope. Global market dynamics, particularly China’s economic policies, continue to influence U.S. exporters.
Chemical shipments rose 0.5% in November for the second consecutive month, driven by agricultural chemicals and other segments, despite a slight dip in coatings & adhesives. Inventories fell 0.5% for the third straight month, lowering the inventories-to-sales ratio to 1.22—the lowest since March 2022. Year-over-year, shipments were up 1.1%, while inventories were down 0.6%.
Chemical wholesale sales rose 0.4% in November after a 1.3% drop the prior month. Inventories declined 1.0% after a 0.2% rise in October. Compared to the previous year, sales were up 6.8% while inventories fell 2.6%. The inventories-to-sales ratio dropped to 1.09 from 1.11, down from 1.20 a year earlier.
Chemical producer prices declined 0.6% in December, the third consecutive monthly drop. Agricultural chemicals, bulk petrochemicals, plastic resins, synthetic rubber, and manufactured fibers saw price decreases. These were partially offset by increases in inorganic chemicals, consumer products, and coatings. Specialty chemicals prices were unchanged. Despite the monthly decline, chemical prices remained 1.1% higher than a year ago.
Energy Update:
• Oil prices rose amid concerns over potential U.S. military action against Iran.
• U.S. natural gas futures declined as the front-month contract rolled to March, though prices remain high.
• Cold weather led to a 242 BCF drawdown in natural gas inventories—the largest since February—keeping stocks near the top of their five-year range.
• The combined oil and gas rig count increased by one to 533.
— news from American Chemistry Council
— News Original —
Weekly Chemistry and Economic Trends (01
Consumer confidence fell sharply in January, down 9.7 points to 84.5. Concerns about both the present situation and expectations deepened at the beginning of the new year. It was the lowest reading since May 2014 (even lower than during the Covid-19 pandemic) as all five components of the index deteriorated. Confidence fell across all generational groups. Within generations, Gen X reported the lowest confidence in January while Gen Z reported the highest. Consumers’ plans for buying big-ticket items waned. Buying plans for autos were flat while expectations for buying refrigerators, dishwashers, furniture and TVs declined. Homebuying expectations also fell. n nAdvance durable goods orders surged 5.3% in November, following a revised 2.1% decline in October. The large gain reflected a near doubling of orders for civilian aircraft. Orders were also higher for communications equipment, machinery, fabricated metal products, and electrical equipment. New orders for motor vehicles and parts were off for a second month by 0.5%. Core durable orders (nondefense capital goods excluding aircraft) rose 0.7%, the fifth consecutive gain. Compared to last November, headline orders were up 10.5% while core orders were ahead 4.1% Y/Y. n nFactory orders rose 2.7% in November, driven by a gain in durable orders; nondurable orders were flat. Orders were higher for civilian aircraft and other nondefense capital goods; construction materials and supplies; computers; and IT equipment. Orders were lower for motor vehicles and parts; defense capital goods; and consumer goods. Unfilled orders (a measure of the manufacturing pipeline) rose 1.4%, the highest monthly gain since May. Both factory shipments and inventories ticked slightly higher (up 0.1%). As a result the inventories-to-sales ratio was unchanged at 1.56. n nThe General Business Activity index in the Dallas Fed’s Texas Manufacturing Outlook Survey rose 10.1 points to -1.2 in January, suggesting overall manufacturing activity in the state declined at a slower pace. The indices for production, orders, employment and shipments switched from contraction to expansion, while several other indicators became less negative, suggesting a slowing pace of contraction. Looking ahead six months, expectations were slightly more optimistic. n nThe Federal Open Market Committee (FOMC) held interest rates unchanged at the 3.5%–3.75% range, having cut rates three times between September and December of last year. Two Fed governors dissented, favoring a 25 basis-point cut. The committee said solid economic growth, elevated inflation, and a stabilizing labor market justified the decision. It also stated that it will assess the effects of the previous rate cuts to determine future actions as uncertainty about the economic outlook remains elevated. n nProducer prices rose 0.5% in December, led by higher prices for final demand services (in particular, trade margins). Final demand goods prices were unchanged, following a 0.8% gain in November. Higher prices for nonferrous metals, natural gas, motor vehicles, soft drinks and aircraft equipment were offset by lower prices for diesel fuel, gasoline, jet fuel, beef, and iron & steel scrap. Compared to a year ago, headline producer prices were up 3.0% Y/Y while core producer prices (excluding food and energy) were up 3.5% Y/Y. Both measures were steady compared to November. n nWholesale inventories rose 0.2% in November, the same increase registered in October. The largest gains were in electrical equipment, miscellaneous durable goods, and pharmaceuticals. On the flip side, furniture, paper products, and lumber saw the biggest declines. Wholesale sales leaped 1.3%, propelled the most by apparel, petroleum products, and computer and electrical equipment. Only sales of groceries, lumber, and miscellaneous durable goods declined. Compared to a year ago, sales were up 5.2% Y/Y while inventories gained 1.8% Y/Y. The inventories-to-sales ratio slid to 1.28 from a revised 1.30 in October. n nU.S. trade deficit rose by $27.6 billion in November to $56.8 billion. The increase in the trade deficit reflected growth of 5.0% in imports versus a 3.6% drop in exports. Exports of industrial supplies & materials such as nonmonetary gold & other precious metals and crude oil declined, as did exports of consumer goods, including pharmaceuticals. On the other hand, imports of consumer goods, including pharmaceuticals, as well as capital goods such as computers and semiconductors rose, while imports of industrial supplies & materials declined. n nU.S. chemical manufacturers’ overall level of activity contracted in the fourth quarter, according to companies participating in ACC’s quarterly Chemical Manufacturing Economic Sentiment Index Survey. ACC’s index, based on companies’ assessment of their activity level overall (e.g., sales, production, output), was negative in Q4. However, many of the key economic sentiment indexes registered relative improvements by increasing over the quarter, albeit remaining in negative territory. These include new orders (both foreign and domestic), production levels, companies’ major customer demand, order backlogs, and U.S. and global economic conditions. Moreover, the capital spending index shifted from contraction to a slight expansion. On the other hand, the overall company activity index indicated a slight acceleration in worsening conditions. Costs of raw materials and energy accelerated notably. The number of employees and contractors declined sharply, with the availability of skilled labor dropping modestly. The rate of destocking decelerated, while the current regulatory burden declined. Looking six months ahead, there were sharp increases in the indexes of new orders, production levels, inventories, overall company activity, and major customer demand. At the same time, companies expect costs to keep increasing, particularly for labor. n nAccording to data released by the Association of American Railroads, chemical railcar loadings were up to 33,773 for the week ending January 24th. Loadings were flat on a 13-week moving average basis and up 7.0% YTD. n nWithin the comments of the Texas Manufacturing Outlook Survey, one chemical industry respondent noted, “End markets are still highly uncertain in durable goods, building and construction, and automotive. As interest rates continue to fall, we are hopeful for increasing activity. China’s economic policies and influence on the global market are still driving significant uncertainty for large exporters from the U.S.” n nChemical shipments rose for a second consecutive month in November, up by 0.5%. Gains in shipments of agricultural chemicals and all other chemicals offset a slight decline in coatings & adhesives. Chemical inventories, however, fell for a third straight month, down 0.5%. The inventories-to-sales ratio moved lower from 1.24 in October to 1.22 in November, the lowest that ratio has been since March 2022. Compared to a year ago, chemical shipments were up 1.1% Y/Y while inventories were off 0.6% Y/Y. n nChemical wholesale sales rose 0.4% in November following a 1.3% drop the prior month. Wholesale inventories of chemicals lost 1.0% after inching up 0.2% in October. Compared to a year ago, chemical inventories were down by 2.6% while sales were up 6.8%. The inventories-to-sales ratio fell from 1.11 in October to 1.09. A year ago, the ratio was 1.20. n nChemical producer prices slipped for a third month in December, down 0.6%. Prices declined for agricultural chemicals, bulk petrochemicals & organics, plastic resins, synthetic rubber, and manufactured fibers. Those declines were partially offset by gains in prices for inorganic chemicals, agricultural chemicals, consumer products, and slight increase in coatings. Prices for other specialty chemicals were flat. Chemical prices remained ahead compared to a year ago, up by 1.1%. n nEnergy Wrap-Up n n• Oil prices jumped on concerns about a potential U.S. strike on Iran. n n• U.S. natural gas futures fell sharply as the front-month contract rolled over to March, but remain elevated. n n• Amid sharply colder weather across the U.S., natural gas inventories fell by 242 BCF last week, the largest withdrawal since last February. Gas inventories remain at the upper end of their five-year historical range. n n• The combined oil & gas rig count rose by one to 533. n nFor More Information n nACC members can access additional data, economic analyses, presentations, outlooks, and weekly economic updates through ACCexchange: https://accexchange.sharepoint.com/Economics/SitePages/Home.aspx n nIn addition to this weekly report, ACC offers numerous other economic data that cover worldwide production, trade, shipments, inventories, price indices, energy, employment, investment, R&D, EH&S, financial performance measures, macroeconomic data, plus much more. To order, visit http://store.americanchemistry.com/. n nEvery effort has been made in the preparation of this weekly report to provide the best available information and analysis. However, neither the American Chemistry Council, nor any of its employees, agents or other assigns makes any warranty, expressed or implied, or assumes any liability or responsibility for any use, or the results of such use, of any information or data disclosed in this material.