Second-quarter machinery statistics show four of five segments have declined from the same period a year ago, but the Society of the Plastics Industry Inc. reports a modest improvement from this year's first quarter - a trend one expert expects to continue through 2007.
Washington-based SPI released its second-quarter report Aug. 21, through its Committee on Equipment Statistics.
Bill Wood, an economist who provides the analysis for SPI's report, said the capacity utilization rate at U.S. plastics factories has increased to nearly 88 percent in recent months.
``As long as the operating rates continue to rise gradually, the market demand for new machinery and tooling will rebound in the coming months. Sustained operating rates above the 86 percent level have historically been the range that triggers increased spending on new equipment,'' Wood said.
Capacity utilization for plastics should exceed the 86 percent level for the rest of 2007 and all of 2008, said Wood of Mountaintop Economics & Research Inc. in Greenfield, Mass.
Wood said high energy and resin prices are still the ``biggest downside risk.'' But prices should moderate later this year, and if petroleum products come down in price, resin prices also should fall quickly, he said in the report.
For the biggest sector, injection molding machines, tough times continue. Wood said problems facing the U.S. automotive industry, plus the high resin and energy costs, continue to cut profit levels at molding companies, and make for slow investment in new equipment.
SPI reports 723 injection presses were shipped in the second quarter, a 12 percent decline from the second quarter of 2006. For the first half of this year, unit shipments were down 16 percent compared with the year-ago period.
On the positive side, SPI said second-quarter shipments were up 8 percent from the first quarter of 2007, a moderate rebound.
For all of 2006, 3,455 injection molding machines were shipped.
Wood said U.S. spending on all types of industrial equipment showed a ``significant jump'' in the second quarter, following three straight quarterly declines. ``The slow uptrend in the overall equipment spending data will persist through the end of this year and into 2008,'' he said.
SPI also reported:
Extruders fell back, after a strong first quarter. The category, which includes single- and twin-screw extruders, totaled 261 units in the second period, a 6 percent decline from the year-earlier quarter. The number is just one fewer than the first quarter of 2007. Looking at the first half, however, unit shipments were up a solid 14 percent over the first half of last year.
The key end market, residential construction, will remain slow until 2008, SPI said. Packaging will remain steady.
Blow molding machinery shipments totaled 25 in the second quarter, eight more than were shipped in the second quarter of 2006, and two more than the first quarter of this year.
The components segment, including screws and barrels, declined 15 percent from the year-ago period, which SPI said was unusually strong. Components gained 1 percent from the first quarter this year. For the first half of 2007, shipments of screws and barrels were down 13 percent, compared with the first half of 2006.
Bookings for auxiliary equipment totaled $81.6 million in the second quarter, down 15 percent from the year-ago second quarter, and just slightly below the level booked in this year's first quarter.
First-half bookings were down 11 percent. SPI forecasts a return to growth in demand for auxiliaries in the second half of 2007.