Processing Flat, But Looking Up

With a reading of 49.3, Gardner’s Plastics Processors’ Business Index was virtually flat in September. After fairly significant growth in the first five months of 2013, the industry has been level since.

The good news is that the rate of contraction in September was slower than in the prior few months. New orders began growing again after two months of contraction. Production grew at its fastest rate since May, continuing its string of expansion to nine months. Backlogs contracted at a slower rate but are still well below 50 (the dividing line between growing and contracting). After a very slight pause in hiring in August, employment expanded in September. Exports continue to contract, but at their slowest rate since October 2012. Supplier deliveries continued to lengthen, although at a slower rate than in the first half of 2013.

Material prices increased at a slightly faster rate, while prices received grew at their fastest rate since February. Future business expectations improved marginally in September.
Small processors have held back the index throughout 2013. However, processors with fewer than 19 employees registered their second highest index level since July 2012. Their business activity was markedly better than in August. This was one the most significant reasons for the improved Plastics Business Index in September, as the other plant sizes saw virtually identical business conditions from August to September.

The Mid-Atlantic region had the most improved index, moving to 50.5 from 41.7. The region has grown in four of the last five months. East North Central was the fastest growing region (highest index value) in September, ending two months of contraction. New England, Pacific, and South Atlantic regions moved from growth to contraction.