North American plastics machinery shipment values declined significantly in 2023 compared with 2022 for injection molding and extrusion equipment.
Values dropped in 2023's first quarter, as is typical for first quarters, but then barely budged the rest of the year, forgoing the bump usually seen in the fourth quarter.
The fourth-quarter 2023 figure of $348.1 million reflects a 19.5 percent decline compared with the same period in 2022, according to the Plastics Industry Association's Committee on Equipment Statistics (CES).
The Washington-based association breaks out figures for injection molding machines; those shipments dropped 21.1 percent in the fourth quarter of 2023, compared with the same period in 2022. (Statistics for extruders aren't included in that figure, as the data set is too small to be meaningful.)
"The decline in U.S. manufacturing activity, coupled with a high-interest-rate environment, contributed to a slowdown in business investment spending, including in plastics machinery," Perc Pineda, the association's chief economist, said in a Feb. 29 news release.
Exports from the U.S. fared better, rising 5.1 percent in the fourth quarter over the third, and surging 19.6 percent year over year. Mexico remained the top export market, with Canada a distant second.
Imports showed an 11.7 percent quarter-over-quarter increase, reaching $427.6 million, but recorded a 14.1 percent year-over-year decline.
Despite the dismal shipment figures, CES said its latest quarterly survey indicates plastics machinery suppliers are increasingly upbeat about market conditions for the coming year. In the previous quarterly survey, only 56.1 percent of respondents said they expect conditions to remain the same or improve. In the new poll, that figure rose to 82.9 percent.
Experts' expectations vary regarding upcoming machinery market conditions.
"While the unexpected 2.5 percent U.S. economic growth in 2023 averted a recession, primarily fueled by robust household spending in the services sector, signs of recovery may emerge in 2024," Pineda said.
"Sustained consumer spending could prevent economic deterioration, especially if labor markets continue to stay healthy. As interest rates begin to return to normalcy from inversion, there's a likelihood that business investment, including in equipment, will reverse course."
Plastics News Economics Editor Bill Wood, however, is more cautious.
"Almost every year, there's a strong surge at end of the year," he said. "The fact that it's not surging this time says something to me, and it's not good."
He cited higher interest rates and costs, and declines in plastic parts production and machinery utilization rates.
"The entire plastics industry is in a recession," he said. "The economic conditions that caused this have not changed. … As far as machinery, the signs of recovery aren't emerging."
In fact, he sees "signs of further deterioration."
"That could change in a couple weeks, but I don't see it yet," he said.
Wood did note, however, that it's an NPE year and an election is coming — both of which "usually juice the numbers."