Plastics Processing Pattern Prevails With an Uptick in December
Like December 2022, the December 2023 index represents increased activity following dips in November.
The Gardner Business Index (GBI) for plastics processing contracted more slowly in December, up to 44, 1.4 points above November’s number. The index is based on survey responses from subscribers to Plastics Technology. Indices above 50 signal growth; below 50, contraction.
FIG 1 Plastics processing activity continued to contract in December, albeit a bit slower than in November. The same is true for custom processing activity.
Like December 2022, the December 2023 index represents increased activity following declines in November. Plastics processing activity remains contracted in the big picture. The direction of December’s index appears to have been driven by stabilized contraction in production and backlog, and slower contraction of employment. Rising optimistic business sentiment for the next 12 months may have processors poising for new orders or it could be “normal” variation. The next couple of months will be telling.
Exports continued on a steady path of contraction, while supplier deliveries hovered around 50 (flat, meaning that as many see supplier deliveries taking longer as see them coming faster) like it has since September 2023.
FIG 2 Stabilized production and backlog combined with slower employment contraction may be signs of better things to come in 2024.
Overall business activity for custom plastics processors is up almost 3.2 points versus November 2023, though it still contracted like it has since June of 2022.
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
December 2023 marked a downturn in manufacturing, signaling weaknesses despite a marginal uptick in the GBI Plastic Processing Index, which continues to hover below the growth threshold. Following the COVID-19 pandemic, the economy, including the plastics industry, exhibited a V-shaped rebound, an unexpected reversal altered the upward momentum two years later. Insights from the GBI illustrate the distinctive post-pandemic trajectory of plastics processing. This divergence notably accentuates the contrast between the contributions of the household and business sectors to the economy.
Perc Pineda
Household spending shielded the economy from recession risks of materializing, but business investments, notably after a peak in July 2020, lacked momentum, positioning manufacturing closer to the lower curve of a K-shaped recovery.
Despite robust economic indicators, the Federal Reserve’s stance appears resolute. The surge in the S&P 500 during November and December hinged on anticipated interest rate cuts, stemming from post-December meeting comments by the Fed Chairman. Yet, uncertainties loom over 2024’s earnings growth, lacking solid market signals for a significant upswing including in plastics processing for the year ahead. Based on current data, however, a moderated pullback in 2024 compared to 2023 seems plausible for plastics. processing.
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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