Published 7/19/2023

Index Still Searching for Growth

But the good news is that June’s results were nearly a point above May’s.

economics

Jan Schafer

Director of Market Research

As part of our subscriber survey, we ask our audience to share their sentiments about future business conditions. While not part of the GBI calculation, June’s responses revealed that more processors believe business will be better for them over the next 12 months compared to those who indicated otherwise.

FIG 2 Employment and supplier deliveries dipped their toes on the other side of flat in June. It is not the first time this year for employment, but supplier deliveries have not contracted one bit since February 2020, thanks to the pandemic and supply chain chaos.

Overall business activity for custom plastics processing contracted again in June, but more slowly, gaining a full 3 points vs. May, putting it back in line with April of this year.

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 has a BA in psychology from Purdue University and 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

The unemployment rate in plastics and rubber products manufacturing increased from 1% in May to 1.8% in June. For the second quarter of 2023, the average unemployment rate in this sector was 1.0%, lower than the total manufacturing average of 2.7%. This is a significant improvement from the 3.7% unemployment rate in Q1 2023.

The Fed’s Industrial Production Index indicates a 2.8% decline in plastics products manufacturing in Q1 2023, following a 3.2% decrease in Q4 2022. There was a slight increase in monthly plastics manufacturing in April and May, but a contraction of at least 1.0% in May would lead to a third consecutive quarter of decline. The GBI plastics processing also suggests weaker plastics production throughout the first half of 2023.

By Perc Pineda

These conditions align with the overall macroeconomic situation in the U.S. Despite the Federal Reserve's financial tightening and a less optimistic economic outlook for 2023, the labor market has remained resilient. However, there has been an increase in layoff notices from companies in recent months.

In the short term, the Fed is likely to raise interest rates, and the resumption of student loan payments will impact personal consumption expenditures. With debt-service payments as a percentage of disposable income increasing, it is expected that economic activity will slow down further in the second half of 2023. This suggests that constraints on growth in plastics production will persist throughout the 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.