Processing Making Slow, Steady Progress
Plastics processing activity didn’t make its way into expansion territory in March, but seems headed in that direction.
The Gardner Business Index (GBI): Plastics Processing registered 48.6 for March, up 1.6 points from February’s 47. The index is based on survey responses from subscribers to Plastics Technology. Indices above 50 signal growth; below 50, contraction.
New orders, production and backlog — all steadily posting slowing contraction — drove the Index in March. Supplier deliveries lengthened faster again, potentially signaling higher demand in March. Exports and employment were essentially nonfactors, staying relatively stable in the contraction zone during March.
FIG 1 Plastics processing activity contracted more slowly in March, as did custom processing activity for the fifth month straight.
Business optimism took its first dip in five months in March, but barely so, such that it was more of a leveling. Overall business activity for custom plastics processing paralleled total plastics processing in March, landing at the same value.
FIG 2 New orders, production, and backlog all contracted at a slower rate in March. Source: Gardner Intelligence
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
The U.S. economy outperformed expectations in 2023, expanding by 2.5% in real GDP. Despite facing higher borrowing costs, aggregate supply has significantly improved, indicating a prospect for continued growth in 2024. This improvement could potentially lead to an upswing in plastics production, as the balance between aggregate demand and supply further improves.
However, the first quarter of 2024 indicates little deviation in plastics manufacturing from previous periods. The plastics processing GBI has consistently remained below the 50-growth threshold, indicating neither significant expansion nor contraction. This trend has persisted for several quarters. Despite this, there has been a gradual increase in GBI values since January this year.
Perc Pineda
Similarly, the monthly Industrial Production Index for plastic products manufacturing (2017=100) has hovered close to the base since March 2023. In seven of 12 months, however, production fell below 100, while exceeding it in the other months. During these downturns, the deviations from the base were minimal—99.7 this past February and 98.8 in January. Overall, the deviation below the base since March 2022 stayed within a narrow margin of 0.1 to 1.2.
These production pullbacks are more significant when compared to the 19 consecutive months of gains since June 2021. During this period, plastics production saw year-on-year increases of up to 8.0%. Such rapid growth proved unsustainable as inventories built up. While plastics production could see an upward trend this year, it is unlikely to see a steep trendline. Nevertheless, it will be an improvement from 2023.
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.
Related Content
Plastics Processing Activity Near Flat in February
The month proved to not be all dark, cold, and gloomy after all, at least when it comes to processing activity.
Read More
Plastics Processing Continued Contraction in April
Despite some index components accelerating and others leveling off, April spelled contraction for overall plastics processing activity.
Read More
Plastics Processing Contraction Slows Slightly
While the market is still sluggish, future business outlook rose significantly from last month.
Read More
Processing Takes a Dip in June
Plastics activity took a relatively big downturn in June, ending at a low for the year and lower than the same month a year ago.
Read MoreRead Next
Beyond Prototypes: 8 Ways the Plastics Industry Is Using 3D Printing
Plastics processors are finding applications for 3D printing around the plant and across the supply chain. Here are 8 examples to look for at NPE2024.
Read More
For PLASTICS' CEO Seaholm, NPE to Shine Light on Sustainability Successes
With advocacy, communication and sustainability as three main pillars, Seaholm leads a trade association to NPE that ‘is more active today than we have ever been.’
Read More
People 4.0 – How to Get Buy-In from Your Staff for Industry 4.0 Systems
Implementing a production monitoring system as the foundation of a ‘smart factory’ is about integrating people with new technology as much as it is about integrating machines and computers. Here are tips from a company that has gone through the process.
Read More