Favorable oil-to-gas price ratios driven by the production of natural gas from shale continue to drive a renewed U.S. competitiveness that’s boosting exports, and driving greater domestic investment, economic growth, and job creation within the business of chemistry, a recent analysis says.
Likewise, supported by activity within the domestic chemicals sector, the U.S. economy is likely to see continued, though moderated growth in 2014, according to officials at the American Chemistry Council (ACC).
The positive findings stem from a pair of recent reports put up by the organization: the Year End 2013 Chemical Industry Situation and Outlook and monthly “Chemical Activity Barometer” (CAB).
The latter is an established leading economic indicator, shown to lead U.S. business cycles by an average of eight months at cycle peaks, and four months at cycle troughs.
According to the ACC, the barometer ticked up to 93.9, a 0.1 per cent increase over November on a three-month moving average basis. It’s the eighth consecutive monthly gain for the CAB, which remains up 2.8 per cent over a year ago.
According to Kevin Swift, the ACC's chief economist, the barometer’s reading, in conjunction with findings outlined in the organization’s said year-end review, indicates that "American chemistry is back in the game.”
“After a decade of lost competitiveness, American chemistry is reemerging as a growth industry,” Swift said. “We're seeing growing end-use markets, strengthening employment, surging exports, and an influx of tremendous capital investment. Put simply, the U.S. is now the most attractive place in the world to invest in chemical manufacturing.”
Swift pointed to several key points to illustrate the turnaround in the industry:
- Over the next five years, production is expected to grow by almost 25 per cent, pushing industry shipments to US$1 trillion by 2018.
- For the first time since 1999, the U.S. chemical industry is seeing job growth.
- Shale gas and the surge in natural gas liquids supply has helped move the U.S. from being a high-cost producer of key petrochemicals and resins to among the lowest cost producers, globally. As a result, exports are surging. The industry has gone from a chemicals trade deficit to a surplus, this year expected to be about US$2.8 billion, and by 2018 reaching nearly US$30 billion, from almost US$300 billion in total exports.
- Capital investment is exploding. Beginning in 2010, as chemical manufacturers began recovering from the Great Recession there has been double digit growth in capital spending – including equipment upgrades and efficiency investments. Over the next five years we are likely to see more than US$60 billion in domestic investment.