Chemical buyers continue to paint a mixed picture of business activity. For every buyer citing order growth in July, there were 1.2 citing decline and 1.4 citing stable order levels. On the weak side are the usual suspects: aerospace, textiles, and telecommunications industries. Quite a number of chemical buyers say demand from automotive end markets has also slowed noticeably of late. Construction-related markets, meantime, are a persistent source of strength.

Looking ahead, there's some optimism in buyers' comments. For example, a Toledo-based purchasing agent says business is "slow, but expected to grow as the year goes on." And the production-purchasing manager for a pharmaceuticals interest says, "Business is increasing [through] new products, expansions, etc."

Still, most chemical-buying organizations, according to PURCHASING's July survey, will play it safe in second half 2003, buying hand-to-mouth and keeping in-house stocks extremely lean. The good news is that pressure on margins appears to be easing as weakening demand has made it more difficult for chemical sellers to push through cost-driven price increases. PURCHASING's diffusion index tracking the trend in prices paid by chemical buyers fell from a high of nearly 75% in April to near neutral in July.

**This story is based on data collected monthly from buyers by Purchasing magazine. The data (leadtimes, business strategies, pricing) is available for sale in the product catalogues at http://www.purchasingdata.com.