Plastics Processing Contraction Slows Slightly | Plastics Technology

While the market is still sluggish, future business outlook rose significantly from last month.

The September Gardner Business Index (GBI) shows plastics processing is still contracting overall, but contracted slightly less this month than last. Future business outlook is improving — up more than seven points from last month’s index.

The GBI is an indicator of the current state of plastics processing considering survey responses regarding new orders, production, backlog, employment, exports and supplier deliveries. Over 50 is expansion. Under 50 is contraction.

The GBI is an indicator of the current state of plastics processing considering survey responses regarding new orders, production, backlog, employment, exports and supplier deliveries. Over 50 is expansion. Under 50 is contraction.

The Gardner Business Index (GBI) Components Scorecard reports the monthly change rate of primary composites market factors contributing to the overall monthly index reading.

Reading the Scorecard:

The GBI Future Business Index is an indicator of the future state of the plastics processing market considering industry respondents regarding their opinion of future business conditions for the next 12 months. Over 50 is expansion and under 50 is contraction.

The index remained positive and improved slightly over last month, while average spend went up about 20%.

Find the latest plastics processing market research and reporting at GardnerIntelligence.com.

Perc Pineda, Ph.D.,Plastics Industry Association

The GBI Plastics Processing Index continued to decline in September, reaching 43.3, which is 6.7 points below the growth threshold of 50. Although there was a slight improvement from 42.2 in August, the three-month moving average at 43.0 indicates continued sluggishness in plastics processing. On a brighter note, the future business outlook component remained steady, with a three-month moving average of 55.3 in September.

Three factors are noteworthy when analyzing the September GBI plastics process:

Seasonal Slowdown: Summer typically represents a weaker period for manufacturing and international trade. Export and import activities usually drop during these months, influencing the lower GBI Plastics Processing Index readings.

Economic Conditions: While data for the third quarter is still incomplete, early indicators suggest manufacturing is stable but lacks significant growth drivers. Because manufacturing is a key market for plastics, the sector’s interest-rate-driven slowdown has constrained plastics processing growth. Even with the Federal Reserve’s 50 basis-point rate cut in September, immediate gains in manufacturing are unlikely due to the lag effects in monetary policy.

Labor Market Trends: September’s job report showed 254,000 nonfarm payroll employees were added, but 79.5% of them were in the services sector, with only 8.3% in the goods producing sector. Manufacturing lost 7,000 jobs, including 4,000 in motor vehicles and parts, which negatively affected plastics processing, while food manufacturing added 2,400 jobs. Plastics and rubber products manufacturing lost 1,700 jobs, with the unemployment rate increasing to 5.9% from 4.2% in August. The third quarter unemployment rate of 4.1% was marginally lower than the 4.2% total civilian unemployment rate in the economy for the same period.

Despite modest month-over-month improvements, the GBI remains below the growth threshold, pointing to sluggish plastics processing activity. However, the stable business outlook component of GBI offers some optimism for the sector’s future.

The month proved to not be all dark, cold, and gloomy after all, at least when it comes to processing activity.

Contraction dominated the GBI index for overall plastics processing activity and almost all components, collectively suggesting a slowdown.

Plastics processing GBI contracted for the third month in a row.

The drop in plastics activity appears to be driven by a return to accelerated contraction for three closely connected components — new orders, production and backlog.

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