According to the American Chemistry Council (ACC), the U.S. Chemical Production Regional Index (U.S. CPRI) rose by 1.1 percent in July, following an upwardly revised 0.7 percent gain in June, and a 0.6 percent increase in May, as measured on a three-month moving average (3MMA) basis. During July, output grew in all regions for the first time since December 2016.
Also measured on a 3MMA basis, chemical production was mixed. There were gains in the production output trend of consumer products, pharmaceuticals, other specialty chemicals, pesticides, fertilizers, coatings, plastic resins, adhesives, chlor-alkali, other inorganic chemicals, industrial gases, and organic chemicals. These gains were offset by declines in the output trend in synthetic rubber and manufactured fibers.
Nearly all manufactured goods are produced using chemistry in some form or another. Thus, manufacturing activity is an important indicator for chemical production. On a three-month-moving average basis, manufacturing activity edged lower by 0.1 percent in July, following a 0.3 percent gain in June. Production expanded in several chemistry-intensive manufacturing industries, including aerospace, petroleum refining, plastic products, and wood products.
Compared to July 2016, U.S. chemical production was up 2.3 percent on a year-over-year basis, an improving trend. Chemical production was ahead of year ago in all regions. In the Gulf Coast region, which has seen a surge in investment over the past several years, production was up 5.8 percent Y/Y.
The chemistry industry is one of the largest industries in the United States, a $768 billion enterprise. The manufacturing sector is the largest consumer of chemical products, and 96 percent of manufactured goods are touched by chemistry. The U.S. CPRI was developed to track chemical production activity in seven regions of the United States. The U.S. CPRI is based on information from the Federal Reserve, and as such, includes monthly revisions as published by the Federal Reserve. To smooth month-to-month fluctuations, the U.S. CPRI is measured using a three-month moving average. Thus, the reading in July reflects production activity during May, June and July.