PMMI reports continued business conditions strength

The packaging machinery sector continued to show strength in the first report of 2003, according to the Packaging Machinery Manufacturers Institute's (Arlington, VA) Business Conditions Index (BCI).

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The latest BCI report shows two measures growing and all four measures staying above 50, the index level indicating expansion or growth. General Business Conditions rose 2.9 points to 60.5; Quotations rose 5.2 points to 60; Shipments dropped 16.6 points from its record high of 69.9 to 53.3 points; and New Orders dropped 1.5 points to 61.7 points. With three points in the 60's and shipments recording a score in the 50's, all four measures continue to point to strength in the packaging machinery sector.

"Though we saw a dip in the indices over the holidays, January's figures continue to support the notion that companies are using this period to both quote and purchase capital equipment," says Charles D. Yuska, president of PMMI. "This activity, combined with the Administration's tax proposals for businesses regarding the writing down of capital equipment, could provide much-needed relief in the manufacturing sector."

An index of more than 50 indicates an expansion in the period and an index below 50 indicates a slowdown in activity. The January BCI tabulates the input of approximately 100 of PMMI's 500 PMMI member companies. The BCI is based on PMMI's "How's Business?" survey, a weekly poll of member companies. PMMI's Business Conditions Index (BCI) collects data on four business indicators: general business conditions, new orders, shipments and quotations/proposal activity on a weekly basis.

Packaging machinery sales, quotation activity, new orders as well as general business conditions are leading indicators for consumer goods companies' consumer confidence. If consumer products companies believe that demand will weaken, they tend to not invest in new capital equipment. If, however, they feel demand will pick up, they tend to invest in machinery that will bring their products to market quickly and efficiently.

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