Industrial Production of Plastics Products Accelerates in Q1
18. April 2013
According to data released earlier this week by the Federal Reserve Board, total industrial production of plastics products in the U.S. increased by 6% in the first quarter of 2013 when compared with the same quarter of a year ago. This is an acceleration in the recent uptrend as total output for the whole year of 2012 escalated by a more subdued 4.3%. We expect this pace of growth to be sustained for the remainder of the year, and our forecast for all of 2013 calls for a rise of 6% in total output of plastics products.
It should be noted that this data set was significantly revised in the latest monthly release. The most notable changes were the downward revisions in the monthly output totals in 2012. So the good news is that the growth rate appears to be accelerating, but the bad news is that it is growing off of a significantly lower base than was previously reported. The total output of the plastics industry is still about 10% below the level it was in 2007. It is unlikely we will get back to those levels this year, but on the current trajectory we will certainly get back to prerecession levels in 2014.
Historical analysis suggests that demand for new molds and tooling increases sharply when the growth rate in the output of plastics parts is greater than 5% for a sustained period of time. So the growth in output is currently above 5%, but it needs to continue to expand at this pace for two or three more quarters. If it does, then there will be a sharp rise in demand for new molds and tooling as well as all types of molding equipment. If our forecast holds, then it means that 2013 should be a decent year for moldmakers and the really strong demand will most likely occur in 2014.