Economic Outlook

Staff -- Converting Magazine, 4/1/2001

The est. dollar value of manufacturers' shipments of nondurable goods declined by 0.3% between Dec. 00 and Jan. 01, following a decrease of 0.2% during the prior month. The value of new orders decreased by 0.3% in Dec. 00 and by 0.2% during Jan. 01, so we're unlikely to see improvement in shipment trends until late spring at the earliest. The est. value of Jan. 01 nondurable shipments was a modest 2.3% above the Jan. 00 total. Food product shipments, which had grown at a healthy rate during Q4 00, fell by 0.7% in Jan. 01. Most surprising was a steep 3.6% plunge in the value of drugs/soaps/toiletries shipped during Jan., following full-year 00 growth of almost 10%. There's little question that the growth rate in nondurable shipments will continue to moderate through Q3 of this year. But we're betting that growth will begin to accelerate again by late summer.

Converting's exclusive packaged goods price index (PGPI) increased by 0.2%, before seasonal adjustment, between Dec. 00 and Jan. 01. Average prices for 10 of 16 components that make up the composite PGPI increased during Jan. 01. The sharpest over-the-month increases were posted by the sanitary paper products (+1.8%), soft drinks (+1.6%), and household glassware (+0.6%) groups. Dec-to-Jan price increases in seven other categories were in the 0.1%-0.3% range. These increases were partially offset by modest declines in alcoholic beverage, pharmaceutical preparation, and household appliance prices, and by more substantial drops in prices for floor coverings (-0.8%) and shortening/cooking oils (-2.1%). Slower economic growth and more stable energy prices should cause inflation in these markets to ease still more during the first half of this year.

Behind The Numbers

Packaging product leadtimes moved marginally lower, on average, during Q1 00. As the U.S. economy cooled, production and transportation bottlenecks eased, despite continued labor shortages in some parts of the nation. A monthly survey conducted by Purchasing magazine captures information on the average amount of time elapsed between an order for a specific kind of packaging product and its actual physical delivery. Compared to the average for Q3 00, leadtimes for 4 of the 7 product groups that we follow moved lower during Q4 00. Containerboard leadtimes were unchanged between the third and final quarters of last year, and remained at lower levels than those that had prevailed throughout the first half of 2000. Leadtimes were marginally higher for folding cartons, but were up sharply for the plastic film product category. And in Jan. 01, the plastic film lead-time average still stood at 3.0 weeks, compared with the 2.2 week average recorded in Jan.00. The prevailing direction for packaging product delivery times was downward, however, in the early days of 2001.

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Packaging Leadtimes (Average Number of Weeks to Delivery)	Avg. 2000	Q3/00	Q4/00	Q1/01*	Q2/01*
Folding Cartons	3.3	3.2	3.3	3.2	3.1
Containerboard	2.8	2.6	2.6	2.6	2.5
Corrugated Containers	2.5	2.6	2.2	2.7	2.5
Plastic Film	2.6	2.5	3.1	3.0	2.8
Laminates	3.3	3.8	3.2	2.9	2.8
Linerboard	2.9	3.1	2.8	2.8	2.6
Multiwall Bags	3.2	3.8	3.7	3.3	3.0