Plastics Processing 'Jumps' into New Year
While still in contraction mode, the index came in at highest level since March 2023.
Looks like a new year does plastics processing activity good. The Gardner Business Index: Plastics Processing contracted in January to 47.5, but that number represented the highest the index has been since March 2023, and came in 3.5 points over December.
The results were driven by slowed contraction among a number of key components: notably new orders, production and employment. In addition, business optimism grew for a third month in a row, lending confidence (at least real hope) that recent trends may “stick.” A leveling of increasing material prices likely contributed to that optimism.
FIG 1 Plastics Processing activity continued to contract in January despite making great strides in slowing that contraction during January as well as the month before. The same is true for custom processing activity.
Exports continued on a steady path of contraction while supplier deliveries hovered around 50 (flat, meaning that as many processors see supplier deliveries taking longer as see them coming faster) like it has since September 2023.
Business activity for custom plastics processing changed almost the same, slowing contraction to the tune of 3.4 points in January following a 3.2-point dip in December 2023.
FIG 2 Components, new orders, production and employment, all marked notable slowing of contraction to start the new year.
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 earned a bachelor’s degree in psychology from Purdue University and an 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
In January, the Gardner Business Index (GBI) for plastics processing increased by 3.5 points, reflecting a simultaneous growth in employment within plastics and rubber products manufacturing. According to the latest U.S. Bureau of Labor Statistics data, this sector added 2,200 jobs during the same period, signaling a positive start for the industry this year amid an overall economic expansion of 2.5% last year.
Perc Pineda
But a closer look at January’s job numbers reveals concerns, particularly within the manufacturing sector. Out of the 353,000 jobs added, only 23,000 were in manufacturing, whereas the goods-producing sector added a substantial 289,000 jobs.
Moreover, the U.S. economy is grappling with structural unemployment in manufacturing — the mismatch between labor skills supply and demand — evident in the plastics and rubber products manufacturing sector. Despite the addition of 2,200 jobs, the unemployment rate in this sector rose from 2.2% in December to 5.3% in January.
On a positive note, the growth in job opportunities within the services sector, notably an increase of 70,300 jobs in the health care sector in January, suggests robust consumption in services. This bodes well for plastics, as the services sector extensively relies on the material, exemplified by the substantial demand for health care services and corresponding demand for plastics in the health care sector.
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.
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