Plastics Processing Business Climbing

The Gardner Business Index (GBI) for plastics processing began 2019 by moving higher, to a level of 54.6 that was led by a strong expansion in production. The sub-indexes for both production and new orders moved higher in January after showing slowing growth during fourth-quarter 2018. (Values over 50 indicate expansion; values under 50 mean contraction; 50 = no change.)

The index is 1% lower than the same month a year ago, just before the Index reached an all-time high. Of the six components used to calculate the Plastics Processing Index, production and supplier deliveries pushed the overall Index up. All other components pulled the Index lower; however, all components posted improved results over the prior month and none showed a contraction. Although production expanded faster than any other component, backlogs also grew for the first time since September.

January’s results also marked the first time since July 2018 that every component of the index expanded. During the second half of 2018, exports posted five consecutive months of contraction and backlogs two months of contraction. This lackluster performance occurred simultaneously with new trade tariffs taking affect during the second half of 2018. Despite this multi-month contraction in exports, total new orders have expanded in all but one month since the beginning of 2017, suggesting that domestic demand for plastic goods has been able to offset the recent weakness in foreign orders.

For the first time since May 2018, supplier deliveries ceded its position as the leading component of the Index to production. Still, the latest supplier-deliveries reading remains well within the range of accelerated growth readings experienced at the height of the current business cycle, which began in early 2017.

The Plastics Processing Index is based on monthly surveys of Plastics Technology’s subscribers.

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.