March 2016 Index: 52.8

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Processing business index registers growth for first time in 10 months.

With a reading of 52.8, Gardner’s Plastics Processors’ Business Index for March rose into growth territory (above 50) for the first time since April 2015, ending 10 straight months of contraction (below 50). The index has increased sharply in the last three months. In March, every sub-index except exports made a positive contribution to the overall index.

New orders increased at an accelerating rate for the second month in a row, and the index reached its highest level since January 2015. Production also increased at an accelerating rate for the second month in a row. It too was at its highest level since January 2015. While the backlog index showed contraction for the 14th month in a row, it continued to improve. Employment expanded for the second time in three months, growing at its fastest rate since March 2015. Because of the strength of the dollar, exports remain mired in contraction. Supplier deliveries lengthened for the second month in a row.

Material prices decreased for the fourth time in five months in March, although the rate of decrease was negligible. Prices received continued to decrease, but the rate has decelerated slowly since June 2015. Future business expectations have increased noticeably since December, reaching their highest level since March 2015.

All plant sizes but the smallest expanded in March. Processors with more than 250 employees recorded strong growth for the second month in a row. Plants with more than 100-249 employees expanded for the first time since December. Facilities with 50-99 employees expanded at a strong rate for the fourth month in a row. Companies with 20-49 employees expanded for the second month in a row. Each of these plant sizes grew at a very similar rate in March. And the index for processors with 1-19 employees continued to contract but at its slowest rate since December 2014.

Every region except the South Central expanded in March. The North Central-West grew at the fastest rate—the first time since last June.

Compared with one year ago, future capital spending plans for the next 12 months decreased nearly 14% in March. Since December, the month-over-month rate of change has alternated between contraction And growth. But this appeared to indicate the early stages of an expansion in capital spending at plastics processors. 

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