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The chemical industry refers to an industry involved in the production of chemicals. The industry includes petrochemicals, agrochemicals, pharmaceuticals, polymers, paints, and oleochemicals. Chemical processes are used, including chemical reactions to form new substances, separations based on properties such as solubility or ionic charge, and distillations, in addition to transformations by heating and other methods. Chemical industry sales and profitability tend to follow the U.S. consumer economy, with peak sales and profits a few years after strong consumer economic growth periods and low points during recessions. While demand growth for the overall chemical industry has slowed since the 1960s, it is still better than annual gross domestic product (GDP) gains. Operating margins were about 6 percent in 2000 compared with a peak of almost 11 percent in 1995. Research and development and capital spending by the industry are about $30 billion each, or just under 7 percent of sales. The fastest growth areas are life sciences, specialties such as electronic chemicals, and select plastics. The overall employment level of the chemical and allied industries is over 1 million people, with about 600,000 in direct manufacturing. Most of the chemical industry's basic manufacturing plants are located in the Gulf Coast due to the proximity of key energy raw materials. Finished product manufacture, by contrast, is located closer to population centers on the East and West Coasts and in the Midwest.

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