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6/19/2014 | 2 MINUTE READ

Industry Growth Continues

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For three months running, the processing market has grown at its fastest rate since early 2012.

With a reading of 54.4 in May, Gardner’s exclusive Plastics Processors’ Business Index grew for the sixth time in seven months. While the rate of growth slowed the last two months, the processing market has grown at its fastest rate since early 2012 for three months running. And the rate of growth still maintains the upward trend it began in late 2013. Compared with a year ago, the index was 5.2% higher in May. The annual growth rate in the index has accelerated in each of the last four months.

New orders have grown for seven straight months, and the rate of growth remains strong. Production has grown for 17 straight months. It continues to grow at a rate faster than at any other time since the spring of 2012. Backlogs contracted slightly for the first time since February 2014. However, the backlog index was higher than one  year ago for the seventh consecutive month. The annual rate of growth in backlogs has improved dramatically over this period. This suggests that capacity utilization  will improve in the second half of 2014.

Employment expanded, although the rate of increase has fallen back to levels similar to the second half of 2013. Exports grew for the first time in 21 months. May saw the fastest rate of growth in exports since February 2012. Supplier deliveries continue to lengthen, but the rate has slowed since February.

Material prices increased at a significant rate. However, since February, the rate of increase has come down dramatically. Prices received continued to increase as well, but the rate of increase is very moderate. Future business expectations have softened somewhat the last two months, but are still positive.

Plants with more than 50 employees had a slower rate of growth in May. Processors with more than 250 employees had their slowest growth yet in 2014. But this was made up for by the dramatic improvement at smaller plastics processors. Plants with 19 or fewer employees had an index of 55.6 in May. This is by far the fastest rate of growth for these small processors since our index began in December 2011.

All regions grew for the third month in a row.  Average future capital spending plans were above $1 million per plant for the third month in a row. While the one-month rate of change contracted last month, it grew in May for the fourth time in five months. The annual rate of change remains at a very high growth level but has been slowing down for at least the last six months.