Solid Growth Continues

With a reading of 53.1, about the same as last month, Gardner’s Plastics Processors’ Business Index showed that the processing market grew for the 13th time in 14 months in December.

These last two months have clearly broken the downtrend in the index since March. Compared with one year ago, the index increased 8.4% in December, which was also the fastest rate of month-over-month growth since August. The annual rate of growth decelerated from last month but the rate of change has remained fairly constant for the last five months.

New orders have grown for 14 consecutive months, although December’s new orders increased at one of the slowest rates of the year. Production continued to expand at a significant rate. December recorded the fastest growth in production since August. Backlogs continued to contract, though. However, compared with a year ago, the backlog index continued to grow at a solid rate. On a year-over-year basis, backlogs have been increasing more than 11% for four straight months. This indicates that capacity utilization and capital equipment consumption at plastic processors should increase in 2015.

Employment continued to grow. Exports were flat for the second month in a row. Supplier deliveries continued to lengthen at a significant rate. Material prices hardly increased at all in December. The rate of increase has collapsed in the last two months, likely related to the dramatic fall in oil prices. Prices received by processors contracted for the first time since November 2013. Future business expectations continued to improve in December, reaching their highest level since March.

Facilities with more than 100 employees continued to expand strongly. But plants with 50-99 employees contracted for the second time in three months. Processors with 20-49 employees have seen very strong growth the last three months. And processors with fewer than 20 employees grew for the first time since May.

The North Central–East grew at the fastest rate and has been the strongest performing region over the last three months. 

Future capital spending plans contracted by more than 30%, month-over-month, for the third month in four. The annual rate of change has contracted at an accelerating rate for three straight months.