����ý

The Gardner Business Index: Plastics Processing for December made November’s break in steadily contracting activity look like a blip. December was down 3.4 points vs. November, more than twice the drop in any previous month of the recent contractionary period, closing at 42.9, a level not seen since May of 2020. The index is based on survey responses from subscribers to Plastics Technology. Indices above 50 signal growth; below 50, contraction.

FIG 1 Activity contracted in a relatively big way for total plastics processing in December, and to a lesser extent for custom processing.

Five of six GBI components contracted again in December, all at increasing rates vs. November. Backlog and new orders picked up the contraction pace the most, suggesting order queues are getting shorter and new orders are coming in slower. Production continued to contract. Less product coming off lines is consistent with declining demand, including that seen in contraction of export activity. Supplier deliveries continued in slowed expansion mode coming off inflated highs due to supply-chain issues rather than strong demand.

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FIG 2 Contracting new orders and exports mean declining demand, which drove contracting production activity in December. (3-MMA = 3-month moving averages)

Overall ����ý activity for custom processing contracted at a faster rate again in December, closing the month at 41.8 compared with November’s 43.1.

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 

The Gardner Business Index (GBI) on plastics processing decreased sharply in December from November. It reflects a ����ý sentiment that
has turned more pessimistic.

By Perc Pineda

The U.S. economy continues to adjust from inflationary growth rates
since 2020, which were financed by massive fiscal stimulus and zero interest rates. As the economy started to normalize —primarily through monetary policy tightening— ����ýes recalibrated their expectations.

The effects of the Federal Reserve’s 4.5% rate hike in 2022 have not seemed to cause a significant pullback in economic activity yet, because monetary policy works with a lag. With inflation staying above the 2% target, expect further financial tightening. Businesses operate with lead times in mind. The short-term response of the ����ý sector to rising borrowing costs, against the backdrop of weaker economic activity, is to pull back on investment spending.

The economy’s investment spending on equipment — not just plastics
equipment — slowed to an estimated 3.4% in Q4 2022 from 10.7% in Q3 on an annualized basis.

The current macroeconomic adjustment, which will continue in 2023, will generate uneven effects on plastics’ end markets. The most likely scenario, as the economy downshifts into a lower gear, is for the demand for plastics and plastic products to grow at rates lower than the prior highs… particularly in interest-rate-sensitive end markets.
This will be in sync with an economy that is returning to its long-run rate of output growth.

Personal consumption expenditure, which is almost 70% of U.S. GDP, is projected to increase by 0.7% in 2023. Given that an estimated 89% of
plastics products end up in personal consumption, a decrease in plastics demand in 2023 from 2022 can be expected to be negligeable.

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