Published 5/31/2023

Plastics Processing Continued Contraction in April

Despite some index components accelerating and others leveling off, April spelled contraction for overall plastics processing activity.

economics

Jan Schafer

Director of Market Research

Employment expanded in March, sustaining about the same value into April. This suggests that even in an otherwise (mostly) steady state of plastics processing activity, employment activity can still grow. This dynamic is likely a function of plastics processors, like many manufacturers, being deep in the skilled workforce/labor hole.

Supplier deliveries flirted with flat in March, then lengthened a bit again in April. Lengthening of supplier deliveries is typically a good sign, indicating that volume/demand is more than suppliers can accommodate in a timely manner. However, since none of the other components appears to be driving expansion this month, it may be that remnants of supply-chain issues continue to impact supplier deliveries in plastics.

Overall business activity for custom plastics processing took a hit in April, down almost 4 points from March.

FIG 2 Only backlogs contracted at a slower rate in April; other contracting variables, including new orders and production, leveled off.

EDITOR’S NOTE: Finding reliable and relevant data to help guide your business is always important, but especially so during challenging economic times. For this reason, the GBI Plastics Processing Index serves as a great tool for making data-driven decisions. Thank you to everyone who has previously completed GBI surveys. Your participation helped increased response in 2021-2022, making the GBI better than ever because of your involvement. Thank you for your time and efforts and for trusting us to provide you with the latest industry and business insights both in the past and in the future.

If you are a North American plastics processor and would like to participate in this research, click here to begin the process by subscribing free to Plastics Technology magazine.

ABOUT THE AUTHOR: Jan Schafer is director of market research for Gardner Business Media, parent company of both Plastics Technology magazine and Gardner Intelligence. She has led research and analysis in several industries for over 30 years. She has a BA in psychology from Purdue University and MBA from Indiana University. She credits Procter & Gamble for 15 years of the best business education. Contact: (513) 527-8952; jschafer@gardnerweb.com.

Numbers in Perspective

The Gardner Business Index (GBI) for Plastics Processing in April reflects ongoing economic uncertainty despite a strong labor market. In April, the overall U.S. labor market remained strong with an unemployment rate of 3.4% and the addition of 253,000 jobs. However, the 0.1% unemployment rate specifically in plastics and rubber products manufacturing suggests a more favorable situation within the industry.

By Perc Pineda

Keep in mind that the unemployment rate is a lagging indicator, meaning it reflects past economic activity. However, the service-providing sector has been adding more jobs than the goods-producing sector since January. This discrepancy highlights the higher demand for services than goods.

The strong demand for services resulted in a 9.9% increase in services consumption in the first quarter of 2023 vs. the same period in 2021. The consumption of goods increased by only 2.1% during the same period. Given the higher interest rates, growth in services consumption is expected to continue to outpace the consumption of goods. This trend can benefit certain sectors of plastics product manufacturing.

While the economic outlook remains uncertain, the low unemployment rate in plastics and rubber products manufacturing suggests relative stability and potential growth opportunities within the industry, particularly in sectors related to the demand for services. The addition of 77,000 jobs in healthcare and 31,000 jobs in leisure and hospitality in April indicates robust consumer demand, which in turn drives demand for plastics in these sectors.

ABOUT THE AUTHOR: Perc Pineda, PhD, 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.