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While contracting for the eighth month straight, the rate of contraction of plastics processing activity slowed in February, continuing a trend that began in January. The Gardner Business Index  for Plastics Processing closed February up four points, to 49.1, landing close to July’s index that launched the eight-month contractionary period. The index is based on survey responses from subscribers to Plastics Technology. Indices above 50 signal growth; below 50, contraction.

FIG 1 Plastics processing activity contracted again in February for both custom processing and total processing, but the latter inched closer to flat.

The GBI sub-index for new orders appeared to be leading the way — still contracting, but at a slower rate in February. As expected, production activity and backlogs followed suit. February export and employment activity stayed about the same as last month, both still contracting, with employment inching ever-so-close to flat, where it has hovered for five months. There was no pressure on supplier deliveries in February, reinforcing that any uptick in plastics activity is not going to stress the system. In fact, supplier deliveries that have been lengthening at a slowed rate for months threatened to shorten in February.

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FIG 2 Drivers of plastics processing activity contracted at slower rates in February.

If the past 12-month supplier deliveries trend continues into March, there will be a shortening of supplier delivery times for the first time in three years. The supplier deliveries trend also suggests supply-chain issues that artificially lengthened supplier deliveries for months have resolved or have otherwise lost their impact. The GBI Plastics Processing Index and component activity are encouraging, but far from “on fire,” so cautious optimism is recommended. Overall ����ý activity for custom processing stayed about the same, contracting to a greater degree than total plastics processing in February. 

EDITOR’S NOTE: Finding reliable and relevant data to help guide your ����ý is always important, but especially so during challenging economic times. For this reason, the GBI Plastics Processing Index serves as a great tool for making data-driven decisions. Thank you to everyone who has previously completed GBI surveys. Your participation helped increased response in 2021-2022, 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 ����ý insights both in the past and in the future.

If you are a North American plastics processor and would like to participate in this research, click here to begin the process by subscribing free to Plastics Technology magazine.

ABOUT THE AUTHOR: Jan Schafer is director of market research for Gardner Business Media, parent company of both Plastics Technology magazine and Gardner Intelligence. She has led research and analysis in several industries for over 30 years. She has a BA in psychology from Purdue University and MBA from Indiana University. She credits Procter & Gamble for 15 years of the best ����ý education. Contact: (513) 527-8952; jschafer@gardnerweb.com.

Numbers in Perspective

Expect the U.S. economy to continue to adjust in 2023 and end with a lower GDP growth rate than last year. The uptick in the Core Personal Consumption Expenditures (Core PCE) Index in January was a clue to consumers’ resilience. Core PCE, which excludes volatile food and energy prices, is the Federal Reserve’s preferred measure of inflation. It rose to 4.7% in January from 4.6% in December year-on-year. The marginal increase, however, contradicts the Fed’s recent interest-rate hikes to bring down inflation.

Dr. Perc Pineda

Higher consumer spending is a net positive for processors and also confirms that more interest rate hikes are coming. So, any optimism about the economy is tempered by the eventual higher costs of capital.

Although inflation-adjusted personal disposable income increased by 1.4% in January from December, revolving consumer credit is up $154.3 billion in December from $67.1 billion a year earlier. Debt-financed consumer spending has limits. With the Fed expected to continue raising interest rates, expect a larger pullback in consumer spending.

The Federal Reserve Bank of Atlanta created the Atlanta Fed/Chicago Booth/Stanford Survey of Business Uncertainty (SBU), a one-year-ahead survey of expectations firms have about their employment and sales. Sales revenue growth expectations have been decreasing. In the last 12 months, the SBU peaked in April 2022 at 6.8% and decreased thereafter to 4.7% in February 2023.

ABOUT THE AUTHOR: Perc Pineda, PhD, chief economist of the Plastics Industry Association (PLASTICS), is an industry thought leader and
PLASTICS’ primary expert and spokesperson on the U.S. and global economy, industry research, statistics, trends and forecasts. He
produces PLASTICS’ two annual flagship publications — Size & Impact and Global Trends — and trademarked the Global Plastics Ranking. Read
his views and insights on the economy and the plastics industry at