Plastics Processing Contracted Again in March
Processing activity contracted for the ninth straight month, and at a faster rate.
The Gardner Business Index (GBI) for Plastics Processing closed March at 48, losing 1.1 of the 3.2 points it gained in February. The index is based on survey responses from subscribers to Plastics Technology. Indices above 50 signal growth; below 50, contraction.
In March, all GBI components moved in the right direction, according to three-month moving averages, though four of six still contracted. New orders contracted the most, with production heading consistently closer to being out of contraction in each month of this year’s first quarter. Employment activity expanded in March to a level last reported in August 2022, ending a five-month contractionary period.
FIG 1 Plastics processing activity contracted again in March for both custom processing and total plastics processing, the former inching ever-so-close to expansion but the latter contracting a little faster.
Backlogs and exports continued to contract for a second and third month straight, respectively, but slower than the month before in both cases. Backlogs reached their October 2022 level, while exports landed close to its May 2022 level.
Supplier deliveries continued to lengthen at a slower rate in March. If this trend that started June 2021 continues, delivery times will eventually shorten.
FIG 2 Two key drivers of plastics processing activity contracted at slower rates in March.
Overall business activity for custom processing, which knocked on the door of expansion in March, had a better month than total plastics processing.
EDITOR’S NOTE: Finding reliable and relevant data to help guide your business is always important, but especially so during challenging economic times. For this reason, the GBI Plastics Processing Index serves as a great tool for making data-driven decisions. Thank you to everyone who has previously completed GBI surveys. Your participation helped increased response in 2021-2022, making the GBI better than ever because of your involvement. Thank you for your time and efforts and for trusting us to provide you with the latest industry and business insights both in the past and in the future.
If you are a North American plastics processor and would like to participate in this research, click here to begin the process by subscribing free to Plastics Technology magazine.
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
A dip in the Gardner Business Index (GBI): Plastics Processing in March, following an uptick in February, was expected. It can be expected that manufacturing will continue to pull back — particularly now that economic uncertainty has increased due to concerns about financial fragility. The GBI plastics processing in March reflects such a sentiment.
Dr. Perc Pineda
Although the economy saw promising upticks earlier this year, they were also followed by downticks the month after. A case in point is retail sales. While retail sales saw a 2.9% increase in January, they decreased by 0.1% in February. Another case, which is directly linked to plastics processing, is the change in manufacturing payrolls. This year opened with private employment in manufacturing at an estimated 12.6 million workers — a 31,650 increase from December 2022. It increased by 20,500 in February but decreased by 25,750 in March. The change reflects the broader trend in the U.S. economy, where employment in the services sector is increasing while decreasing in the manufacturing sector.
The March jobs report from the U.S. Bureau of Labor Statistics (BLS) shows that the unemployment rate was 3.5%, marginally lower than the 3.6% in February. The economy added 236,000 nonfarm payrolls in March, which brings the total number of jobs added to 1,034,000 in the first quarter this year. Of the nonfarm payrolls added in March, 196,000 were in the services sector. The goods-producing sector of the economy, which includes nondurable goods production, lost 7000 jobs in March from February. Plastics and rubber products manufacturing lost 2200 jobs in that period, and the unemployment rate was 4.5% — down from 5.0% in March — according to BLS estimates.
ABOUT THE AUTHOR: Perc Pineda, PhD, 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.
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