Processor Activity Increased in June

Plastics processing activity increased in June, as the Gardner Business Index (GBI) for Plastics Processing hit 51.7, up from May’s reading of 51. Compared with the same month one year ago, the Index is 9.9% lower. Index readings above 50 indicate expanding activity while values below 50 indicate contracting activity and 50 equals no change. The farther away a reading is from 50 the greater the change in activity.

A closer look at the underlying components of the Index reveals that production pulled the Index higher, followed by employment, new orders and supplier deliveries. The Index was dragged lower in June by contractionary readings in both exports and backlogs.

Year-to-date 2019 data have exhibited several trends, including moderation of upstream supply volumes after a surge in demand for upstream inputs by plastics processors during the second half of 2018. Gardner Intelligence’s survey data suggest that supplier deliveries have moderated with production, given the similar readings of both measures in 2019. The similarity in readings implies that processors on the whole successfully controlled their inventory levels in the aftermath of the new-orders surge from early 2018.

Plastics Technology’s Custom Processors Index, which focuses specifically on business conditions reported by contract manufacturers, experienced increasing business activity in June after contracting in May for the first time in over a year.

The Plastics Processing Index is based on monthly surveys of subscribers to Plastics Technology.