Hurricane Data Tell a Story

Disaster Aftermath

The pictures of the damage wrought by Hurricanes Katrina and Rita on the Gulf Coast brought home the magnitude of the devastation and the human toll. Announcements of chemical plant shutdowns and supply disruptions let everyone know that there was going to be a huge effect on industry as well. But the latest government data on production and prices show in statistical form just how bad September was for the chemical industry.

The production index from the Federal Reserve Board shows that output from all U.S. chemical plants in September declined 3.3% from August to an index of 108.2 (1997 = 100). This moves output, which had already been declining in recent months, back to about the same level seen in February of last year. Meanwhile, driven by lower supplies, the Labor Department's producer price index for all chemicals rose 2.9% in September to 193.5 (1982 = 100).

These are big numbers for these data, which usually show month-to-month changes in tenths of a percentage point, but they are nothing compared with what is going on in some of the sectors of the chemical industry-especially basic chemicals.

According to the data, combined output of basic organic and inorganic chemicals dropped 12.0% in September to an index of 76.7.

Within this sector, it was the basic organic chemical industry, with its high concentration along the Gulf Coast, that bore the brunt of the storms. The production index for basic organic chemicals plunged 20% in September from the previous month to just 66.3. This is the lowest this measure of output has been since August 1986. Meanwhile, the price index for organic chemicals hit its all-time high of 208.1, 8.4% above where it had been in August.