Index Dips as New Orders, Production Slow
November’s dip continues a three-month contraction in business activity.
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Gardner’s Plastics Processing Index dipped marginally in November to 46.4 as new orders and production activity each contracted. (Index readings above 50 indicate expanding activity while values below 50 indicate contracting activity. The further away a reading is from 50 the greater the change in activity compared with the prior month.) Supplier deliveries also contracted.
FIG 1 Plastics business activity worsened in November, with all index components reporting contracting activity for the first time since late 2011.
During most of the current calendar year these components have played an important role in supporting the Plastics Index. Having lost most of that support in recent months, the Index has been trending farther below a “no-change” reading of 50, representing a decline in business activity since August.
Particularly severe contractions in backlogs and exports throughout 2019 worsened the fall Index readings relative to all other components. Similar to the overall Plastics Index, the Custom Processors Index fell as a result of both production and new orders transitioning from expansion to contraction.
FIG 2 Erosion in production and new orders during the third quarter of 2019 left the Plastics Process Index without two of its critical supports. The result has been a three-month accelerating contraction in the Index.
The Index is based on surveys conducted each month of subscribers to Plastics Technology Magazine.
About the Author: Michael Guckes is chief economist and director of analytics for Gardner Intelligence, a division of Gardner Business Media, Cincinnati. He has performed economic analysis, modeling, and forecasting work for more than 20 years among a wide range of industries. He received his BA in political science and economics from Kenyon College and his MBA from Ohio State University. Contact: (513) 527-8800; mguckes@gardnerweb.com. Learn more about the Plastics Processing Index at gardnerintelligence.com.
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