US chemicals up for third straight month, trend still weak
WASHINGTON, Sept 25
WASHINGTON, Sept 25 (Reuters) - The U.S. chemicals sector grew for a third straight month in September, a survey showed on Tuesday, but the underlying trend remained consistent with lackluster demand and economic growth.
The American Chemistry Council said on Tuesday its Chemical Activity Barometer, which measures activity in the sector, increased 0.3 percent this month to 89.9, the highest in five months, after rising 0.4 percent in August.
Compared to September last year, the index was up 1.8 percent. The index - derived from sales, production, inventories and stock prices among others - is strongly correlated to the Federal Reserve's industrial production report.
"While it is encouraging to see three consecutive months of gains, this is not a cause for celebration ... as the economy continues to face strong headwinds and concerns around the fiscal cliff crystallize," said Kevin Swift, chief economist at the ACC.
The fiscal cliff refers to the $500 billion or so in expiring tax cuts and government spending reductions set to take hold in 2013 because of failure by the U.S. Congress to agree on some orderly alternative method of cutting budget deficits.
The increase in the index this month largely reflected gains in the share prices of chemical companies. Production and inventories were flat, while prices continued to decline.
The index's three-month moving average, which irons out month-to-month volatility, declined for a fifth straight month in September, suggesting sub-par economic growth into 2013.
Demand for chemical products occurs early in the supply chain and changes in production are considered a good indicator of trends in the broader economy. (Reporting by Lucia Mutikani; Editing by James Dalgleish)