Recycled materials industry faces uncertainty despite strong US GDP growth and inflation dip in Q3 2023
2023年11月15日 20:49:50
铝云汇
The recently released real (adjusted for inflation) United States Gross Domestic Product (GDP) figures for the third quarter (Q3) exceeded expectations. According to the advanced estimates by the Bureau of Economic Analysis, the GDP exhibited a growth rate of 4.9 per cent annually in Q3 2023. This slightly surpassed the consensus estimate of 4.7 per cent and marked more than a twofold increase compared to the 2.1 per cent growth in the previous quarter. The growth was primarily driven by upticks in consumer spending, private inventory investment, federal government spending, residential fixed investment, and exports.
Joe Pickard, the Chief Economist of ISRI, said, "We're encouraged by the economy's overall growth but remain concerned about the manufacturing sector. This concern is reflected in the Institute for Supply Management's October Manufacturing Purchasing Managers Index (PMI) –signalling that economic activity in the manufacturing sector contracted for the 12th consecutive month."
ISRI is the Voice of the Recycling Industry™, promoting safe, economically sustainable and environmentally responsible recycling through networking, advocacy, and education
Inflation remains a significant concern despite the federal fund's effective rate holding steady since late July. The Gross Domestic Purchases Price Index, reflecting inflation in prices paid by US consumers, businesses, and governments, including imported goods, recorded a 2.9 per cent increase during Q3. Although an improvement from the 7.0 per cent index in Q3 2022, it still surpasses the Federal Reserve Board's 2 per cent target, prompting concerns about a potential rate hike at the upcoming Federal Open Market Committee (FOMC) meeting.
The Producer Price Index, gauging the average change in selling prices received by domestic producers, showed a 1.3 per cent increase in final demand during Q3 (seasonally adjusted). When annualized, this suggests a 5.2 per cent rise in producer prices over the next year, raising apprehensions within the recycled markets industry.
Commodity prices overall rose by 2.1 per cent in Q3, with notable increases in paper (up 9.2 per cent) and iron and steel (up 1.7 per cent), while aluminium saw a slight decline (down 0.6 per cent). Copper (down 1.6 per cent) and nonferrous (down 1.0 per cent) experienced decreases during the quarter.
During the third quarter, data from the Census Bureau indicates a 0.7% decrease in building materials. The housing market contributed to this modest decline, reflected in positive and restrained gains. Notably, total housing permits, representing newly authorized privately-owned housing units in the U.S., experienced a 3.9 per cent decrease. Additionally, housing starts, indicating the commencement of construction for new residential units, saw a significant drop of nearly 10 per cent. The decline in existing home sales by 4.9 per cent resulted in a 4.7 per cent increase in housing inventory, potentially signalling reduced buyer interest.
The housing market's influence extends to the demand for recycled materials in various end-uses such as appliances, wiring, and carpets and impacts curbside collection volumes. A point of concern is the persistently high level of authorized housing permits that have yet to commence construction.
In contrast, autos/parts data for Q3 revealed a 1.4 per cent increase. However, the ongoing United Auto Workers strike potentially impacts the autos/parts sector throughout the fourth quarter and beyond, creating a ripple effect.
Pickard said, “Recyclers continue to face various challenges and opportunities this year. Though the manufacturing sector is hurting, we are hopeful that current investments and efforts to promote sustainability and decarbonization will bode well for the recycled materials industry going forward.”
Source: ISRI
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