Biz activity data bucks trend
By Staff -- Purchasing, 2/5/2004 2:00:00 AM
PURCHASING's Business Activity Index continued its steady rise in January, gaining another two points as more than half (53%) of buyers polled reported increasing new-order activity at their companies. However, culling out survey responses from buyers of chemicals draws a different picture—with business activity actually declining a bit in January. It's tempting to write off the divergence as statistical noise—mere anomaly—but the same trend occurs with PURCHASING's indexes tracking future demand. While the overall Forward Demand Index rose six points in January, the index for just chemicals-consuming companies dropped a point.
Remarks from chemicals and resins buyers suggest the divergence is rooted in a few struggling industry segments. For example, the purchasing coordinator for an Ohio-based firm says, "Our major customers are the pharmaceutical and biotech sectors, which both experienced major financial difficulties because of the political and economic climate." Aerospace is another laggard end-market for chemicals, suffering from still-weak commercial aircraft demand and, now, waning demand for military aircraft.
In spite of the slightly below-par demand scenario for chemicals, there's evidence the recovery is tightening supplies. Indexes tracking chemical buyers' perceptions of supply tightness at both producer and distributor levels are now above 60. Consequently, the index tracking materials inventory strategy among chemicals buyers has risen 18 points in the last four months.
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