Rising Employment Lifts Processing Index

The Gardner Business Index (GBI): Plastics Processing ended October at 61.7, a small improvement from September. Index values above 50 indicate expansion, and the October increase in the index indicates slightly faster expansion. Among the most significant components driving October’s gain was a five-point increase in employment activity. It was complemented by smaller expansions in production, export orders and total new orders. Faster expansion in production than in new orders during the month narrowed what has thus far been both a widening “production deficit” as processors struggle to keep pace with new orders. Despite the narrowing of the gap between production and new orders, backlog activity was little affected and remains at all-time high levels.

FIG 1 The Plastics Processing Index registered a slight gain, due in part to expanding employment.

Conditions reported by just custom processors indicate slightly better new orders, production, and backlogs. The gap between custom production and new orders closed greatly in October. The narrowing of this gap likely contributed in part to the eight-point decline in backlogs, which achieved the the second lowest reading since February.

FIG 2 Expanding employment activity, coupled with a narrowing of the gap between new orders and production, may have contributed to October’s
slowed expansion in backlogs.

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 counts by 15% in 2020, 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.