Processors Report Lower Growth

The Gardner Business Index (GBI) for Plastics Processing fell one point in December to 50.9 as production contracted and new orders were unchanged. The latest reading brings the average year-to-date reading to 55.3. (Values over 50 indicate expansion; values below 50 indicate contraction; 50 = no change.)

The index is 8.6% lower than in December 2017. Of the six components used to calculate the Plastics Processing Index, supplier deliveries lifted it higher. All other components moved the index lower. December experienced a slight expansion in employment, no change in new orders, and contraction in production, exports and backlogs.

Data from the fourth quarter of 2018 indicate a general slowing of business conditions after experiencing more than 18 months of above-average growth rates. In general, supplier deliveries tend to lag production and new orders readings, both of which experienced record-breaking expansion in early 2018. For the first time since the fourth quarter of 2016, processors indicated a contraction in total production levels while also reporting a decline in backlogs. Essential to production levels are new orders, which showed no change in the month, suggesting that domestic orders are no longer more than offsetting the contraction in exports that started in August.

The index is based on monthly surveys of Plastics Technology subscribers.

ABOUT THE AUTHOR: Michael Guckes is the chief economist for Gardner Intelligence, a division of Gardner Business Media, Cincinnati. He has performed economic analysis, modeling, and forecasting work for nearly 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. Learn more about the plastics processing Index at gardnerintelligence.com.