Processing Index Nears Peak Historical Growth
Growth slowed in November, but index climbed 5% year to date.
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The GBI Plastics Processing Index ended November growing at its slowest rate for 2017. But the index for custom processors climbed, buoyed by increases in new orders and employment. (Index values above 50 indicate expansion, below 50 indicate contraction.)
Backlogs contracted sharply in November, which is consistent with the seasonal pattern of weak fourth-quarter results in prior years, typically followed by improved readings by the end of the first quarter of the following year.
Registering 51.9 for November, the Gardner Business Index (GBI): Plastics Processing indicated slowing growth among processors. The latest reading brings the index’s 2017 year-to-date average to 53.7. November’s reading was the lowest reading for the calendar year; however, in both April and July of this year the index fell sharply, only to rebound.
In the year-to-date period, the index is up approximately 4.9%. The index is based on survey results from subscribers to Plastics Technology Magazine. GBI’s review of the underlying data for the month indicates that new orders, production, employment, and supplier deliveries lifted the business index while exports and backlogs pulled it down. The November readings showed a particularly abrupt change in supplier deliveries, which experienced a substantial slowdown in growth. The backlog reading also moved into deep contraction territory; however, past November backlog readings suggests that the fourth quarter of the year often experiences significant backlog contraction.
The GBI index for custom processors, in particular, increased in November after experiencing five consecutive months of slowing growth. The index was lifted largely by spikes in both new orders and employment, with the latter setting an all-time high. The employment index for the overall plastics industry was far more typical of recent levels.
ABOUT THE AUTHOR: Michael Guckes is the chief economist for Gardner Intelligence, a division of Gardner Business Media, Cincinnati. He has performed economic analysis, modeling, and forecasting work for nearly 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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