Custom Processors Rebound Strongly

Index of 57.9 among custom processors tops overall index.

Coming in at 54.1 in October, the Gardner Business Index (GBI) for plastics processing set the average year-to-date reading at 56.1, indicating strong economic conditions. (Values over 50 indicate expansion; values below 50 indicate contraction; 50 = no change.) Concerning custom processors in particular, the latest index reading of 57.9 revealed significant expansion. Only six times in the last five years has the index for custom processors been higher. (The index is based on monthly surveys of Plastics Technology subscribers.)

Of the six components that comprise the overall plastics processing index, supplier deliveries, production and new orders lifted the index. Conversely, the index was pulled lower by employment. For the month, only backlogs reported no change from the prior month, while exports reported a third consecutive month of contraction.

Gardner Intelligence’s review of the index components reveals that supplier deliveries continue to be the most significant driver of the Index. Among the many manufacturing processes that Gardner covers, supply-chain bottlenecks have been frequently cited as an issue limiting production. The strong response by suppliers to resolve this problem in the second and third quarters of 2018 has done much to support higher production levels and address growing backlogs, according to survey participants.

While much attention has been given to the impact of changes in trade policies between the U.S. and its top trading partners, less attention has been given to the strengthening U.S. dollar, which has appreciated by roughly 10% against the Chinese Yuan and 4% against the Canadian Dollar in the seven months ending in early November.