- Semiconductors Signal No Relief in Global Macroeconomic Slowdown
by Andrew Zatlin, http://www.moneyballeconomics.com/
The industrial slowdown predicted by semiconductors is coming true.
“We are operating in an environment of sluggish global economic growth, deflationary raw material trends, and heightened geopolitical tensions. The demand picture in China has not yet resolved itself, and growth in Europe and North America remains modest. We will continue our focus on commercial discipline, operational excellence and productivity to manage through the current environment.” -Mark Rohr, Celanese (NYSE: CE) CEO
In other words:
* The low growth macro continues.
* A China slowdown is underway. Demand is still unclear four+ months into the year?
* Corporate belt-tightening is underway.
* Big surprise: no layoffs announced.
This is a zero growth environment. Celanese is a leading manufacturer of acetyl based chemicals. Everyone uses its products: automotive, consumer electronics, construction, industrial, food, pharmacy, and agriculture. Things are worse than they appear: CE’s 1Q 2016 topline still shrank after initiating significant price hikes.
Volume demand is just falling, which means payrolls are under threat.
Celanese began small job cuts in 4Q 2015. No layoffs were announced in the earnings release, but what Celanese meant by “commercial discipline” and “operational excellence” is that, under these conditions, hiring is not going to happen.