Latest OECD CLI points to a broad slowdown, ACC report says

The composite leading indicator (CLI) for September, released this week by the Organization for Economic Cooperation and Development (OECD), points “more strongly to a slowdown in economic activity in most OECD countries and major nonmember economies,” according to the most recent Weekly Chemical and Economic Trends report from the American Chemistry Council (ACC; Washington, D.C.; www.americanchemistry.com).

 

The ACC report says CLIs for Japan, Russia and the U.S. point to slowdowns in growth, and CLIs in Canada, France, Germany, Italy, the U.K., Brazil, China, India and other areas of Europe indicate economic activity “falling below longterm trend.” Overall, the OECD CLI fell 0.1% in September, the sixth consecutive monthly decline, ACC points out.

 

OECD CLIs are intended as an early signal of turning points (peaks and troughs) between expansions and slowdowns in economic activity. Since CLIs are centered on industrial production, they are good predictors for basic and specialty chemicals, 85% of which are sold to the industrial sector, ACC explains.

 

ACC’s assessment of other available economic data this week suggests that prices for chemicals fell 0.1% in October, following a 0.5% gain in September. In a breakdown by sectors, basic chemical prices fell by 0.3%, while petrochemicals and derivatives were up 1.2%, ACC said. Prices for inorganic chemicals (down 0.5%), plastic resins (down 2.4%) and synthetic rubber (down 1.3%) all fell.

 

Citing data from the U.S. Federal Reserve, ACC said industrial production in the U.S. rose by 0.7% in October, a higher-than-expected gain that followed two months of flat numbers. October’s increase reflected a surge in mining output, ACC said.

 

Overall, ACC said economic reports for the week were largely positive, including higher retail sales, and balanced inventories. “Price reports showed that inflation eased as energy prices retreated in October,” the ACC report said. “Recent increases in oil prices, however, may make any relief temporary,” ACC points out.

 

Although industrial production was up in October, the average trend continues to point to a slower expansion. “Nonetheless, the rise in industrial production was solid, reflecting continued gains in the manufacturing sector (led by the automobile sector),” the ACC report stated.