Processing Activity Still Expanding, But at a Slowing Pace

The Gardner Business Index (GBI) for plastics processing reported a broad-based slowing of expansion in November, falling nearly five points from the prior month to a level of 57.1. Backlogs were down 10 points, while new orders and supplier deliveries both declined by about five points. While all components of the index registered lower readings from the prior month, all remained above a level of 50, signaling only slowing expansion. These declines are not to be confused with a contraction in activity, as that does not happen until readings fall below 50.

FIG 1 GBM’s Plastics Processing Index showed decelerating expansion in business activity for November.

Custom processors in particular reported slower expansion in backlog activity in November after posting record-high readings in two of the last four months. One surprising trend across both custom and captive processors has been the downward progression of supplier delivery readings during the second half of the year. After setting all-time highs early in the year, sequential readings have generally trended downward and are now well below such peaks. Again, declining component readings that remain above 50 signal only slowing expansion and not an actual contraction in activity.

FIG 2 If the downtrend in supplier delivery times continues, production activity may remain at historically strong levels heading into 2022.

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 and Custom Processing Indices serve 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, 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.

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ABOUT THE AUTHOR: Michael Guckes is chief economist and director of analytics for Gardner Intelligence, a division of Gardner Business Media, Cincinnati. He has performed economic analysis, modeling, and forecasting work for more than 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.