In 2024, nearly 40% of chemical manufacturers realized an increase in total orders during the second quarter over the previous three-month period, according to the latest American Chemistry Council Chemical Manufacturing Economic Sentiment Index (ESI).
While chemical manufacturers responding to the index indicated optimism about improving demand, the same percentage (38%) reported that regulatory burdens have increased. Notably, no manufacturers indicated a decrease in their regulatory burdens during the second quarter.
“Demand for chemicals in the U.S. continued to improve which helped lift production and stabilize inventories during Q2,” said Emily Sanchez, director for economics and data analytics at ACC. “Companies expressed concerns about rising costs on the labor and transportation front and increasing level of regulatory burden as well as a worrisome outlook for the global economy.”
Gains in other sectors helped drive the improved performance for the chemical industry, said Martha Moore, ACC's chief economist. More than 80% of chemistry products are sold directly to the industrial sector, so the industry closely monitors indicators of industrial activity. Many end-use sector indicators in the U.S. improved during the quarter, including motor vehicles, computers and electronics, semiconductors, aerospace, oil and gas extraction, and plastics products.
The ACC index is a quarterly online survey of over 100 U.S. chemical manufacturers. Respondents indicated progress in several key areas, including production, which has risen throughout the year.
While foreign orders decreased slightly during the quarter, manufacturers expect both domestic and foreign orders to rise through the rest of 2024.
The ESI reading for production levels was 24.3 in the second quarter, down from 32.6 in the first quarter. However, 89% of companies said that production was either stable or rising compared to the previous quarter.
Manufactures are investing in their operations again, with nearly half of companies expecting to increase capital spending through 2024.
In addition to regulatory burdens, energy, labor, transportation and raw material costs continue to rise. Chemical manufacturers anticipate these costs will continue to increase this year.
To read the full ACC report, click here.
