North American shipments of primary plastics machinery increased 8.2 percent in the second quarter of 2019, following a weak first quarter, but they remained sluggish compared with the second quarter of 2018, falling 12.7 percent, according to the Plastics Industry Association.
The Washington-based trade association's Committee on Equipment Statistics released the second quarter figures on Aug. 16.
The preliminary estimated value of second quarter shipments was $295.3 million. The value of injection molding press shipments rose 7.4 percent from the first quarter. Single-screw and twin-screw extruders increased 13.6 percent and 13.9 percent, respectively.
Compared to the year-ago second quarter, injection presses gained 7.4 percent and single-screw extruders increased 4.3 percent. But the value of twin-screw extruders fell 29.5 percent from the second quarter of 2018.
"The second quarter numbers are encouraging, but machinery shipments remain comparatively lower than the previous quarters," Perc Pineda, chief economist of the Plastics Industry Association, said. "What's happening here is not surprising, judging from the macroeconomic environment. Real business investment spending in the second quarter fell 5.5 percent. In particular, the investment spending in industrial equipment flattened in the second quarter."
Survey results also indicate a slippage in the machinery sector's level of optimism. In the committee's quarterly survey of plastics machinery suppliers, 56 percent of respondents expect conditions to either improve or hold steady in the third quarter — down from 70 percent who expressed that opinion in the first-quarter survey. Fifty-three percent expect market conditions to be steady-to-better in the next 12 months, which is down from 60 percent in the previous quarter's survey.
Bill Wood, Plastics News' economics editor and owner of Mountaintop Economics & Research Inc., said plastics machinery is sensitive to the overall economy.
"Based on the last three quarters of data, this industry is in clearly in the early stages of contraction, after a very long period of expansion," Wood said.
The Plastics Industry Association also included second quarter data on exports of U.S. machinery, which totaled $378.8 million, a 4.3 percent increase from the first quarter. Mexico, Canada and Germany remain the largest U.S. export markets, with 53 percent of U.S. plastics machinery exported to those three countries, according to the report.
Although plastics machinery exports to China increased 11.4 sequentially in the second quarter, they plunged 37 percent from the same period of 2018.
Pineda said global trade tensions are impacting the economy.
"In the short term, there are two outstanding issues that need to be resolved," he said. "Mexico has ratified the U.S.-Mexico-Canada Agreement, but the U.S. and Canada have yet to sign off on this critical North American trade pact. Both countries must ratify the USMCA. Unless that is resolved, the uncertainty from the ongoing U.S.-China trade dispute will continue to run high and will negatively impact not only the plastics industry but the global economy."