June’s Index: 46.8

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But plants with 100-249 employees expand for fourth straight month.

With a reading of 46.8, Gardner’s Plastics Processors’ Business Index contracted in June for the second time in three months. The index showed that the processing market has been on a downward trend since March. While custom processors, which are mostly injection molders for the purposes of our monthly survey, have had just one month of growth since June 2015, plastic/rubber product manufacturers other than injection molders have expanded significantly for four straight months.

New orders contracted for the second time in three months, falling significantly since their peak in March. Also, production has contracted twice in the last three months, though the downward trend has not been as steep. While the backlog index had contracted at a steady rate for four months, it dropped notably in June.

The employment index contracted for the first time since February. Despite the moderation in the value of the dollar, exports continued to contract. However, the export index generally has improved since November 2015. Supplier deliveries lengthened for the fifth month in a row.

Material prices increased for the third month in a row. Those three months have seen the fastest increase in material prices since November 2014. Prices received decreased after increasing for just one month in May. The general trend in prices received has improved steadily since June 2015. The future business expectations index fell to its lowest level since December 2015.

Processors with more than 250 employees contracted for the first time since January. Plants with 100-249 employees expanded for the fourth month in a row. Facilities with 50-99 employees expanded for the seventh straight month, with an index above 55 in each of the last four months. Companies with 20-49 employees expanded for the third time in five months. The index at processors with 1-19 employees continued to contract, as it has since February 2015.

The Southeast was the fastest growing region for the second month in a row; it has grown in five of the last six months. The Northeast also grew in June for the fifth consecutive month.

Future capital spending plans fell below $1 million/plant for the first time in three months. However, they increased 46% from the same month a year ago. This was the fifth time in seven months that future spending plans grew versus the same month a year ago. As a result, the annual rate of change increased 1.2%, which was the first month of growth since September 2014. 

ABOUT THE AUTHOR

Steven Kline Jr. is part of the fourth-generation ownership team of Cincinnati-based Gardner Business Media, which is the publisher of Plastics Technology. He is currently the company’s director of market intelligence. Contact: (513) 527-8800  email:skline2@gardnerweb.com  blog: gardnerweb.com/economics/blog