Plastics Processing Continues Expansion

In January the Gardner Business Index (GBI): Plastics Processing started off 2018 on the same steady growth trend it followed throughout 2017. Processors are well positioned for additional growth in 2018, as new orders and production in the current and recent months have been the greatest drivers of the index. The index is calculated based on survey responses from subscribers of Plastics Technology magazine.

Index values over 50 indicate expansion, under 50 indicate contraction, and 50 equals no change. For the fifth month in a row, new orders growth has exceeded production. Reviewing past trends from the Gardner Business Indices reveals that when new orders growth exceeds production growth it is typical for manufacturers to experience additional growth in future months as they adjust to increased demand. The outpacing of new orders over production typically results in significant increases in backlogs; however, this has yet to occur, as recent backlog readings indicate only mild increases.

The GBI reading among only custom processors in January grew slightly. During the month, custom processors experienced a faster rate of production but a slightly slower rate of new orders. Surprisingly, backlog, exports, and employment readings all contracted during the month and supplier deliveries recorded no change.

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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.