October’s Index—50.1

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Mid-size plants drive growth among processors.

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With a reading of 50.1, the Gardner Business Index showed that the plastics industry expanded for the first time since May. The index has increased in each of the last four months. (Readings above 50 indicate expansion; below 50 indicates contraction.)

While custom processors contracted for the first time in four months, the rate of contraction was small. Plastic/rubber product manufacturers as a whole grew for the third month in a row. Among major end markets, the electronics industry grew for the second month in a row and was the fastest-growing industry in October. The medical industry contracted for the third month in a row.

New orders grew for the third month in a row. The rate of growth has been constant over those three months. Also, production has increased for the last three months, but the rate of growth slowed in each of those months. Further, the production index generally has trended down since March. The backlog index continued to contract but improved in each of the last four months. The low level of the backlog index has kept the total index down in recent months.

Employment increased for the first time since May. The export index showed that exports were virtually unchanged in October. This was the highest level for the export index since December 2014. 

Material prices have increased since April. The rate of increase in material prices has accelerated sharply in the last two months, pushing the index to its highest level since October 2014.

Prices received increased for the second month in a row. The prices received index has improved steadily since June 2015. The future business expectations index dropped in October to virtually its lowest level of 2016. 

The Northeast was the fastest growing region, and has recorded an index of 54.8 in each of the last two months. The South Central region dropped significantly, falling to its lowest level in at least the last two years.

Facilities with more than 250 employees contracted for the third time in four months. Processors with fewer than 20 employees have contracted every month since January 2015, although their index bottomed in December 2015. The strength of the plastics-processing market has been in mid-size facilities. Plants with 100-249 employees grew for the third straight month and for the 20th of the last 24 months. Companies with 50-99 employees have expanded since December 2015. And processors with 20-49 employees have grown in three of the last five months. 

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