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Numbers in Perspective

Perc Pineda, Ph.D., Chief Economist, Plastics Industry Association

The Gardner Business Index (GBI) rose for the third consecutive month in February, reaching 57.1. While the GBI for plastics processing declined from 50.0 to 45.9, the three-month moving average indicates an upward trend. The future ����ý outlook remained strong at 72.1.

The decline in plastics processing activity in February may have been driven by weather-related disruptions. Many parts of the U.S., including Houston and several Midwest states, experienced an unusually cold winter. The unemployment rate in plastics and rubber products manufacturing spiked to 8.2% in January, a sharp increase from 5.9% in December. However, this proved to be temporary as employment conditions rebounded in February. The Bureau of Labor Statistics reported a decline of 1,000 jobs in plastics and rubber products manufacturing for the month, but the unemployment rate fell to 2.9%, confirming that underlying plastics processing activity remains positive.

Uncertainty surrounding U.S. trade policy could impact the outlook for plastics processors. In 2023, exports of plastic products accounted for 11.8% of domestic shipments, while imports represented a larger share at 19.1%. These figures have likely remained stable into 2024. Despite trade uncertainties, the strong domestic market continues to support plastics processors.

Slack remains in U.S. plastics processing. Capacity utilization stood at 70.5% in January — lower than the 76.0% a year earlier and 78.5% in January 2023 — and production levels continue to recover from their previous lows in 2023 and early 2024. This suggests room for growth. Any potential shortages in end markets could be met through domestic production. With this in mind, processors should proactively seek opportunities, especially as end markets weigh the risks associated with trade policy and tariffs. If history is any guide, the industry has navigated similar challenges before.