Gross Domestic Product, 1st Quarter 2020 (Advance Estimate)
Real gross domestic product (GDP) decreased at an annual rate of 4.8 percent in the first quarter of 2020 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2019, real GDP increased 2.1 percent.
The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see "Source Data for the Advance Estimate" on page 2). The "second" estimate for the first quarter, based on more complete data, will be released on May 28, 2020.Welp, that's bad. Best wishes to all of us.
WASHINGTON (April 28, 2020) – The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), fell 5.5 percent in April on a three-month moving average (3MMA) basis following a downwardly revised 2.9 percent decline in March. On a year-over-year (Y/Y) basis, the barometer fell 7.3 percent in April.
The unadjusted data shows a 6.7 percent decline in April following an 8.9 percent decline in March and a 1.0 percent decline in February. The diffusion index slumped from 47 percent to 35 percent in April. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for March was revised downward by 1.04 points and that for February was revised upward by 0.07 points.
“The latest CAB reading is consistent with a recession,” said Kevin Swift, chief economist at ACC. “The declines of April and March are the most pronounced, pervasive and persistent in the post-World War II period.”
The CAB has four main components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators.
Production-related indicators generally declined in April. Trends in construction-related resins, pigments and related performance chemistry were generally negative. Plastic resins used in packaging and for consumer and institutional applications were mixed. Performance chemistry was negative and U.S. exports were weak. Equity prices are improving. Product and input prices were negative. Inventory and other supply chain indicators were negative.
The CAB is a leading economic indicator derived from a composite index of chemical industry activity. Due to its early position in the supply chain, chemical industry activity has been found to consistently lead the U.S. economy’s business cycle, and this barometer can be used to determine turning points and likely trends in the broader economy. Month-to-month movements can be volatile, so a three-month moving average of the CAB reading is provided. This provides a more consistent and illustrative picture of national economic trends.Well, that's no good. It will be important to watch the CAB to tell us when the economy comes back on the upswing... (But we'll get the official 1st quarter estimate Wednesday morning, so that will be important confirmaton of what this looks like.)
In what they called a “live-in” at the factory, the undertaking was just one example of the endless ways that Americans in every industry have uniquely contributed to fighting coronavirus. The 43 men went home Sunday after each working 12-hour shifts all day and night for a month straight, producing tens of millions of pounds of the raw materials that will end up in face masks and surgical gowns worn on the front lines of the pandemic.
No one told them they had to do it, Braskem America CEO Mark Nikolich said. All of the workers volunteered, hunkering down at the plant to ensure no one caught the virus outside as they sought to meet the rocketing demand for their key product, polypropylene, which is needed to make various medical and hygienic items. Braskem’s plant in Neal, W.Va., is doing a second live-in now.Glad to hear these folks getting the media coverage they deserve.
After decades of consolidation, there are about 800 federally inspected slaughterhouses in the United States, processing billions of pounds of meat for food stores each year. But a relatively small number of them account for the vast majority of production. In the cattle industry, a little more than 50 plants are responsible for as much as 98 percent of slaughtering and processing in the United States, according to Cassandra Fish, a beef analyst.
Shutting down one plant, even for a few weeks, is like closing an airport hub. It backs up hog and beef production across the country, crushes prices paid to farmers and eventually leads to months of meat shortages.
“Slaughterhouses are a critical bottleneck in the system,” said Julie Niederhoff, an associate professor of supply chain management at Syracuse University. “When they go down, we are in trouble.”This virus is revealing all sorts of issues in supply chains. It will be interesting to see how supply chain management is taught in subsequent years...
The first post–COVID-19 pandemic financial results are starting to trickle in from chemical makers, and they aren’t good. Indications are that 2020 will be a year of sharp declines.
LyondellBasell Industries expects its net earnings for the first quarter will land between $110 million and $180 million when it puts out final numbers on May 1. Last quarter, before the pandemic hit, its net was $612 million.
The company says its major sites are up and running and that packaging and medical markets have been robust. However, it did idle production of plastic compounds used in auto manufacturing.
LyondellBasell has been taking money-saving measures such as reducing inventories and slowing capital spending, including the construction of a massive propylene oxide/tert-butyl alcohol plant in Texas. The company expects that 2020 capital expenditures will be down 20% from its original estimate of $2.4 billion.
Preliminary first-quarter figures from the German polyurethane chemical supplier Covestro show a 4.1% decline in sales volumes. It expects earnings before taxes to fall to $277 million, compared to $303 million in the previous quarter.
Covestro expects earnings before taxes to be between $1.1 billion and $1.6 billion for the year, , compared to more than $1.7 billion in 2019. Like Lyondell, the company is throttling back capital spending by around 20%.
In a new report, Moody’s Investor Service says it expects chemical industry earnings before taxes to decline by 10% on average during 2020. Some sectors will be affected more than others, Moody’s says. For example, coatings might be bolstered because of lower raw material costs, but US petrochemical makers will bear the brunt of lower oil prices...I don't understand how the chemical industry taking a 10% hit in earnings won't hit 1) overall employment 2) entry-level R&D employment or 3) wages overall. But we'll see how things go. Best wishes to us all.
2017
January: 101 positions
February: 68 positions
March: 97 positions
April: 61 positions
May : 52 positions
June: 68 positions
July: 95 positions
August: 77 positions
September: 64 positions
October: 116 positions
November: 61 positions
December: 53 positions
Total for 2017: 913 positions
2018
January: 76 positions
February: 65 positions
March: 87 positions
April: 78 positions
May : 73 positions
June: 91 positions
July: 101 positions
August: 60 positions
September: 84 positions
October: 97 positions
November: 103 positions
December: 76 positions
Total for 2018: 991 positions
2019
January: 140 positions
February: 99 positions
March: 122 positions
April: 82 positions
May : 111 positions
June: 89 positions
July: 91 positions
August: 114 positions
September: 84 positions
October: 111 positions
November: 42 positions
December: 96 positions
Total for 2019: 1181 positions
2020
January: 72 positions
February: 115 positions
March: 82 positions
"The US economy, now under a wide-ranging shutdown due to the novel coronavirus, is likely to shrink 4% this year. And US chemical manufacturing will decline by a similar amount, according to a forecast from the American Chemistry Council, the industry’s main trade group. In response, the ACC says, chemical firms will cut jobs and hold off on business investment.
The ACC estimates that US chemical output will fall by around 3.3% in 2020 if shutdowns are lifted before the end of June, but output could drop by 6.5% if shutdowns last through the fourth quarter. The figures do not include pharmaceuticals. In December, the association had projected output to rise slightly this year.
The decline is due to not only public health-motivated shutdowns in the US, but also to unprecedented moves by other governments to restrict the activities of business and consumers....
...While employment in the chemical industry will not suffer to the same degree as in retail, restaurant, and other service industries, ACC expects chemical job losses could total 28,000, or 5.1% of the workforce, in 2020. The cuts would reverse the industry’s 3-year run of job expansion.
And while it is not yet clear how the job cuts would be distributed among production, R&D, managerial, and administrative roles, overall business investment is expected to decline this year, the group says.Worth noting that chemist positions would be a small fraction of those 28,000 positions, but even one thousand chemists would be a major blow...
Federal Reserve Bank of Philadelphia President Patrick Harker told Yahoo Finance on Friday that the U.S. economy should brace for “very bad” data in coming quarters, predicting a sharp contraction in U.S. GDP for 2020 amid the COVID-19 lockdown.
In an interview with Yahoo Finance, Harker said his economic forecast can change depending on how quickly medical sciences can come up with ways to address the coronavirus.
“If that happens sooner, the damage is less, but right now we’re looking at year-over-year, probably around 5% hit on GDP,” he said...Well, here's hoping he's wrong (I'm not holding my breath.)
...Separate from medical supplies specific to COVID-19, a longer-term disruption of China’s pharmaceutical and medical exports could increase the cost of everyday drugs and routine medical procedures in the United States. This could happen as it becomes harder to import APIs for common drugs and components for medical devices.
According to FDA officials, in 2018, China ranked second among countries that export drugs and biologics to the United States by import line (accounting for 13.4% of U.S. imports of those products). However, FDA states it is not able to determine the volume of APIs that China is manufacturing given the complexity of the supply chain and gaps in what pharmaceutical companies are required to disclose about their inputs.
China is also a leading supplier of APIs in global supply chains for painkillers, diabetes
medicines, and antibiotics, meaning a slowdown in API exports from China could increase cost pressures faced by U.S. drug manufacturers. For example, China accounts for 52% of U.S. imports of penicillin, 90% of tetracycline, and 93% of chloramphenicol.
On February 27, FDA Commissioner Stephen Hahn announced that a manufacturer of an unspecified human drug informed FDA of a shortage the drug’s supply related to a Chinese API manufacturer affected by COVID-19. Because information disclosed to FDA regarding drug shortages is considered proprietary, FDA did not disclose the name of the drug in question, but did note that alternatives exist for patient use.
China’s role as the primary supplier of APIs to global manufacturers of generic pharmaceuticals, particularly in India, is likely to increase overall costs of generic pharmaceuticals for consumers in the United States in the short-to-medium term. The outbreak of COVID-19 in India could also affect the availability of generic pharmaceuticals in the United States. India, which supplies approximately 40% of generic pharmaceuticals used in the United States, imports nearly 70% of its APIs from China. In March 2020, India imposed export restrictions on several drugs whose
supply chains rely on China, leading to fears of potential global shortages of generic drugs that have since escalated after India announced a nationwide 21-day lockdown.
