Index Still Searching for Growth

Numbers in Perspective

The unemployment rate in plastics and rubber products manufacturing increased from 1% in May to 1.8% in June. For the second quarter of 2023, the average unemployment rate in this sector was 1.0%, lower than the total manufacturing average of 2.7%. This is a significant improvement from the 3.7% unemployment rate in Q1 2023.

The Fed’s Industrial Production Index indicates a 2.8% decline in plastics products manufacturing in Q1 2023, following a 3.2% decrease in Q4 2022. There was a slight increase in monthly plastics manufacturing in April and May, but a contraction of at least 1.0% in May would lead to a third consecutive quarter of decline. The GBI plastics processing also suggests weaker plastics production throughout the first half of 2023.

These conditions align with the overall macroeconomic situation in the U.S. Despite the Federal Reserve's financial tightening and a less optimistic economic outlook for 2023, the labor market has remained resilient. However, there has been an increase in layoff notices from companies in recent months.

In the short term, the Fed is likely to raise interest rates, and the resumption of student loan payments will impact personal consumption expenditures. With debt-service payments as a percentage of disposable income increasing, it is expected that economic activity will slow down further in the second half of 2023. This suggests that constraints on growth in plastics production will persist throughout the year.

ABOUT THE AUTHOR: Perc Pineda, Ph.D., 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.