Published 3/28/2024

February Index Dips a Tiny Bit

Index holds steady as optimism about future business conditions continues to increase among processors.

economics

Jan Schafer

Director of Market Research

Slowed contraction in new orders and production was joined by a backlog in February. New orders marked the most progress, slowing contraction to the tune of 4 points. Supplier deliveries were a little slower in February, potentially signaling higher demand, while exports and employment were relatively stable, still residing in contraction zone.

FIG 1 Plastics processing activity continued to contract in February amid another month of slowed contraction among components.

Business optimism among processors has steadily increased since October 2023, reaching in February 2024 the highest level since May 2022. Sentiment is likely driven by market and anecdotal indicators that take longer to manifest in real business.

FIG 2 New orders contraction slowed the most and a lot, reflected in slowed production contraction as well.

Overall business activity for custom plastics processing changed almost the same amount as the overall index, but in a positive direction. This marks steadily slowing contraction for custom plastics processing for three months straight.

ABOUT THE AUTHOR: Jan Schafer is director of market research for Gardner Business Media, parent company of both Plastics Technology magazine and Gardner Intelligence. She has led research and analysis in several industries for over 30 years. She earned a bachelor’s degree in psychology from Purdue University and an MBA from Indiana University. She credits Procter & Gamble for 15 years of the best business education. Contact: 513-527-8952; jschafer@gardnerweb.com.

Numbers in Perspective

Although the Gardner Business Index (GBI) for plastics processing remains below the growth threshold of 50, the Q1 2024 average surpassed the previous quarter, suggesting a potentially less pessimistic outlook.
This perspective aligns with recent expectations for the macroeconomy.

In the latest Survey of Professional Forecasters from the Federal Reserve Bank of Philadelphia, the forecast for U.S. economic growth in the first quarter has been revised upward to 2.1%, a significant increase from the previous 0.8%. While optimism prevails among forecasters regarding the U.S. economy, monthly changes in business indices may continue to exhibit varied movements or remain relatively stable. Such variability is inherent in monthly data.

Perc Pineda

The Industrial Production Index for nondurable consumer goods showed a favorable change, experiencing a 0.73% increase in January. This reversal follows the monthly downtrends seen in the previous two months. Given the extensive applications of plastic products and packaging in consumer goods, this current shift in direction is a positive development.

In the previous year, the economy surpassed its potential growth rate. Barring substantial adverse demand and supply shocks, a stable-to-positive trajectory in manufacturing activity is more probable than a downturn, reflecting the current macroeconomic outlook for this year.

ABOUT THE AUTHOR: Perc Pineda, Ph.D., chief economist of the Plastics Industry Association (PLASTICS), is an industry thought leader and PLASTICS’ primary expert and spokesperson on the U.S. and global economy, industry research, statistics, trends and forecasts. He produces PLASTICS’ two annual flagship publications — Size & Impact and Global Trends — and trademarked the Global Plastics Ranking. Read his views and insights on the economy and the plastics industry at plasticsindustry.org.