Economic Outlook

Staff -- Converting Magazine, 6/1/2001

The dollar value of manufacturers' shipments of nondurable goods fell for the fourth month in a row during March. Overall nondurable shipments in March were worth 0.9% less than during March 00. Both shipments and orders for consumer staples were unchanged between Feb. and March, but through Q1 01 were running 3.6% ahead of the total for Q1 00. So the sectors most affecting the converting industry are actually faring considerably better than the nondurable average. For Q1 01, overall food product shipments were 3.7% ahead of Q1 00. The value of meat product shipments rose 2.2% between Feb. and March, beverage and dairy product shipments grew at about a 5% annual rate, and drugs/soaps/toiletries shipments rose 0.3% in March. Cumulative Q1 01 shipments were up 6.3% from Q1 00.

Converting's exclusive packaged goods price index (PGPI) rose 0.3% between Feb. and March. Average prices for 10 of 16 components that make up the composite PGPI increased, another 4 components declined, and both the household flatware and the soaps/detergents groups were flat. Shortening/cooking oils soared 1.9% over the latest month after falling 0.3% in Feb. Average March prices for alcoholic beverages (+1.0%), bakery products (+0.8%), and soft drinks (+0.6%) also rose at rates in excess of the PGPI average. However, these increases were partially offset by declines for floor coverings (-2.8%), household appliances (-0.6%), processed fruits and vegetables (-0.2%), and confectionery products (-0.1%). Between March 00 and 01, average prices increased for 13 of the 16 PGPI components.

Plastics Transaction Prices	March 2001	Q4/00	Q1/01	Q2/01*	Q3/01*
Diffusion Index (% increasing)	64.3	44.9	62.7	47.7	39.1
Transaction Prices (cents per pound; % change from year ago)
HDPE—film grade	50.0	-7.9	-6.7	-4.5	-3.9
LDPE—liner grade	62.0	-6.4	3.2	-2.0	1.1
PET—bottle grade	63.0	14.1	12.5	6.9	1.7
LLDPE—general purpose	49.0	7.9	-2.7	-8.4	-11.5
LLDPE—film grade	49.0	5.3	2.9	1.2	-2.1
Polystyrene—general purpose	57.0	25.0	12.6	-1.8	-17.9
PVC—general purpose	55.0	18.4	10.5	4.3	6.7
* Denotes forecast Source: Purchasing magazine

Behind The Numbers

Prices charged for the plastics used in packaging products moved moderately higher, on average, between Q4 00 and Q! 0. However, not all product categories recorded price increases in the early months of this year, and there's evidence that plastics packaging material prices will gradually through the balance of 2001. The Purchasing magazine monthly diffusion index of plastics product prices moved well above the 50 level—the reading at which an equal number of products are declining in price as are increasing—during Q1 01. Inflation in plastic packaging product prices clearly accelerated in the early months of 01. Four of the seven specific product categories in the accompanying table were higher in price during the first quarter of this year than during Q4 00. The sharpest over-the-quarter increases were recorded by the low density polyethylene (LDPE)-liner grade (+11.0%) and the polyvinyl chloride (PVC)—general purpose (+9.6%) product groups. At the same time, average prices for both polystyrene—general purpose (-8.0%) and linear low-density polyethylene (LLDPE )—general purpose (-4.7%) were lower during Q1 01 than in Q4 00.

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