Despite persistent economic challenges and soft demand across key markets, U.S. chemical manufacturers reported a uptick in activity during the second quarter of 2025, according to the American Chemistry Council’s (ACC) latest Chemical Manufacturing Economic Sentiment Index (ESI). And while uncertainty remains, there are growing signs of cautious optimism heading into the second half of the year.
ACC’s index, based on companies’ assessment of their activity level overall (e.g., sales, production, output) continued to rise in Q2 despite the fact that chemical manufacturers reported continued weak demand in major customer markets and challenging economic conditions in the U.S. and abroad.
“The most recent ESI readings show that chemical manufacturing activity expanded in Q2, driven by gains in production and new domestic orders,” said Martha Moore, Chief Economist at ACC. “While foreign orders and backlogs declined, the overall momentum remained positive. Employment dipped slightly after three quarters of stability, and companies remain wary of both U.S. and global economic conditions.”
“Chemical manufacturers continued to pull back capital spending in Q2 and operating costs continued to increase across the board. Raw material inventories continued to expand, but finished goods inventories declined,” Moore added.
“Looking ahead, while many indicators remain in negative territory, the outlook has improved compared to Q1,” Moore concluded. “The recent passage of the tax law and increased clarity on trade policy are helping to restore manufacturers’ confidence in the U.S. economic landscape.