Processing Activity Contracts More Slowly in January
Despite contracting again in January, plastics processing activity rebounded a bit from a rather significant drop in December.
The Gardner Business Index (GBI): Plastics Processing closed January up three points to 45.9, putting it back in line with December’s index. The index is based on survey responses from subscribers to Plastics Technology. Indices above 50 signal growth; below 50, contraction.
FIG 1 Plastics processing activity showed evidence of slowing contraction for both total plastics processing and custom processing.
Most of the GBI components that make up the overall index stayed about the same in January, still contracting, but disrupting what has been faster contraction each month for the past eight to 12 months, depending on the component. New orders, exports and production slowed contraction just a bit in January. Backlogs and employment activity stayed the same while supplier deliveries continued to shorten at a faster rate. Supplier deliveries are either getting back on track or becoming less problematic because expectations have been adjusted and/or workarounds have been implemented.
Overall business activity for custom processing slowed contraction in January, recovering five points from December and surpassing the index for total plastics processing, which includes captive operations.
FIG 2 Most components stayed in decline in January. The future business index supports hints that plastics processing activity may be starting to look up.
Supporting plastics-processing activity’s slowed contraction is a separate, forward-looking business “sentiment” index (better/same/worse) for the next 12 months that is not part of the GBI calculation. January’s future business index was up nearly five points from December, moving from slight contraction into low-level expansion.
EDITOR’S NOTE: Finding reliable and relevant data to help guide your business is always important, but especially so during challenging economic times. For this reason, the GBI Plastics Processing Index serves as a great tool for making data-driven decisions. Thank you to everyone who has previously completed GBI surveys. Your participation helped increased response in 2021-2022, making the GBI better than ever because of your involvement. Thank you for your time and efforts and for trusting us to provide you with the latest industry and business insights both in the past and in the future.
If you are a North American plastics processor and would like to participate in this research, click here to begin the process by subscribing free to Plastics Technology magazine.
ABOUT THE AUTHOR: Jan Schafer is director of market research for Gardner Business Media, parent company of both Plastics Technology magazine and Gardner Intelligence. She has led research and analysis in several industries for over 30 years. She has a BA in psychology from Purdue University and MBA from Indiana University. She credits Procter & Gamble for 15 years of the best business education. Contact: (513) 527-8952; jschafer@gardnerweb.com.
Numbers in Perspective
The Gardner Business Index for Plastics Processing, which has stayed under 50 (in contraction) for the seventh consecutive month, remains in sync with the ongoing macroeconomic adjustment. While the U.S. economy expanded by 2.1% in 2022, it had slowed from 5.9% growth in 2021. Still, the U.S. Census Bureau’s Industrial Production Index on Plastics Product Manufacturing rose 3.9% in 2022 vs. 2.9% in 2021.
By Dr. Perc Pineda
The GBI may appear to contradict the strength of the labor market, which achieved an unemployment rate of 3.4% in January, according the U.S. Bureau of Labor Statistics. Moreover, the plastics and rubber manufacturing sector added 1200 jobs in January with an unemployment rate of 1.5%. The strong jobs data suggests that plastics product demand remains positive and needs to be supported by additional labor. Moving forward, any increase in plastics production can be expected at lower rates than in 2022 and 2021.
The U.S. Bureau of Economic Analysis shows that plastics and rubber products manufacturing inventories rose $1.1 billion in 2022, following a $2.2 billion decrease in 2021. The real (inflation-adjusted) inventories in a key plastics end market, motor vehicles and parts manufacturing, rose by $2.1 billion last year after a $0.6 billion increase a year earlier. Computer and electronic product manufacturing inventories rose by $0.7 billion in 2022 vs. a $0.2 billion increase in 2021.
ABOUT THE AUTHOR: Perc Pineda, PhD, chief economist of the Plastics Industry Association (PLASTICS), is an industry thought leader and
PLASTICS’ primary expert and spokesperson on the U.S. and global economy, industry research, statistics, trends and forecasts. He
produces PLASTICS’ two annual flagship publications — Size & Impact and Global Trends — and trademarked the Global Plastics Ranking. Read
his views and insights on the economy and the plastics industry at plasticsindustry.org.
Related Content
Plastics Processing Business Index Contracts Further
All components dip as index hits low point of 2023.
Read More
NPE2024 and the Economy: What PLASTICS' Pineda Has to Say
PLASTICS Chief Economist Perc Pineda shares his thoughts on the economic conditions that will shape the industry as we head into NPE2024.
Read More
Plastics Processing Contracts Again
October’s reading marks four straight months of contraction.
Read MoreRead Next
Lead the Conversation, Change the Conversation
Coverage of single-use plastics can be both misleading and demoralizing. Here are 10 tips for changing the perception of the plastics industry at your company and in your community.
Read More
Why (and What) You Need to Dry
Other than polyolefins, almost every other polymer exhibits some level of polarity and therefore can absorb a certain amount of moisture from the atmosphere. Here’s a look at some of these materials, and what needs to be done to dry them.
Read More