The chemical industry was one manufacturing sector that reported contraction in July as chemical equities on the S&P 500 slipped by 3.7%, according to data compiled by the American Chemistry Council (Washington, D.C.; www.americanchemistry.com) in its most recent Chemical and Economic Trends Report.
The broader S&P 500 fell by 2.1% during July, while chemical companies combined fell by the larger figure (3.7%). However, since the beginning of 2011, chemical equities on the S&P 500 are up 3.9%, compared to 2.7% for the full index. The drop in equity markets this week has pushed these figures down even more, the report points out.
Meanwhile, the ACC report cites data from the Institute for Supply Management indicate that the chemical industry was one manufacturing sector that reported contraction in July. “This was lead by declining production and decreases in order backlogs,” the report states. However, the report includes some good news, remarking that chemical company inventories trended lower and customer inventories were reported as too low.”
Overall the economic reports were mixed, ACC said, with the manufacturing numbers signaling a “sputtering economy.” The consumer sector is showing continued weakness and the pace of expansion is slowing. An employment report from Thursday showed that nonfarm payrolls rose by 117,000 and the unemployment rate declined slightly to 9.1%. “But there is still a long way to go until the employment situation is healthy,” the report adds.
Worldwide, the data suggest slowing global factory activity, the ACC report says. “Measures of industrial production indicate a sharp moderation of activity and measures of inflation are moderating as well,” the report explains, adding that the stalling economic activity is leading to softer oil prices.