"China plastic Machine" quoted foreign media reports, although the overall performance of the U.S. economy in the second quarter, GDP growth rate is far higher than the long-term trend, but the Federal Reserve (Board) data showed that June U.S. total production of plastic products than last June Lower 1%, four consecutive months decline, The total production in the second quarter was lower than the same period last year.
Plastic economist Bill Wood predicts the first negative growth in U.S. plastic production this year will occur since 2009. By any measure, the U.S. economy was strong in the second quarter. Aggregate demand, corporate profits and employment levels are strong. Confidence levels remain high, measured by survey data and stock price levels.
Inflation and interest rates are low, and real GDP growth rates are much higher than long-term trends. However, the Fed data showed that the June index of industrial production of plastic products was 111.2. This marked the fourth consecutive month of declines in total production of plastic products, which were 1% lower in June this year than last June, making the total in the second quarter lower than in the same period last year.
And, as the figure shows, the recent downward trend seems to be getting steeper. The capacity utilization chart is even more surprising. This ratio has remained stable in the second half of last year and in the first quarter of this year.
Production levels are rising and utilization is flat because of investment in new machines, which makes the industry more productive. Bill Wood says this is good news for the industry when demand is rising, because it makes processing machines more profitable, but when demand slows, it pushes capacity utilization down, which is what happened this year. Based on current data and the situation experienced in the second half of last year, the growth rates for the third and fourth quarters of 2018 are expected to be negative.
If this forecast is established, this year's growth rate will be negative, which will be the first negative growth in U.S. plastic production since 2009.
In this case, Bill Wood says, the overall activity level of the machine is still quite good, so it's more like a relatively short consolidation period than a longer periodic contraction. But the divergence between the macroeconomic and plastic industry trends is still hard to reconcile. New orders for durable goods grew 7% in the second quarter, and durable goods were a good indicator of manufacturing, including plastics.
Total retail sales grew by 6% in the second quarter, and retail sales were a good indicator of the demand for all types of consumer goods, especially packaging. The likely reason is that activity levels are slowing in the terminal markets of some major plastic products. The demand for new cars, for example, has fallen. So far this year, total motor vehicle assembly has been about 2% lower than in the first half of 2017. In addition, spending growth in residential construction projects is slowing. Compared with last year, the rate of new housing starts fell by 5% in June. Demand data for pipes and panels and household appliance production data (down 2% in the second quarter) in recent months This effect can be seen. Finally, the output of American medical supplies has fallen by 4% so far this year.