August 2017 Index: 56.2

At 56.2, the Gardner Business Index (GBI): Plastics Processing improved during August and
brought the year-to-date 60 index to 54. So far, 2017 figures have shown a significant
improvement over 2016, when the average index value was 49. The August 2017 Plastics Processing Index was supported by improvement in supplier deliveries, production, and employment.

The spread in the index values between material prices and prices received widened again in August. Since 2016, material prices have grown faster than prices received by plastics processors, which implies reduced profit margins for processors unable to pass along rising costs. Data collected during the second quarter of 2017 indicated that the growth in material prices was beginning to slow. That welcome change in events however ended quickly as material prices increased slightly in July and then picked up speed in August. The disruption caused in late August when Tropical Storm Harvey hit Texas undoubtedly will result in further increases in material prices.

Data from custom processors indicated a turnaround from the prior month, with the August index coming in at 55.4, the second strongest month of growth in 2017. For August, custom processors reported significant improvements in supplier deliveries, production, new orders, and backlogs.

The Plastics Processing Index is calculated by GBI each month from surveys sent to subscribers of Plastics Technology magazine.

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ABOUT THE AUTHOR: Michael Guckes is the chief economist for Gardner Business 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. Michael 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; gardnerweb.com.