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Learning About Trends in Customers’ Industries

By AICC Staff

July 24, 2019

The more an independent corrugated converter can learn about customers’ industries, the better he or she will be able to anticipate and meet changing needs. While there are many ways to increase knowledge about an industry, this article will focus on two areas of employment and inflation changes using information available in the U.S. Bureau of Labor Statistics’ (BLS) online data.

BLS publishes data monthly for metropolitan area, state, regional, and national aggregations. The BLS website, www.bls.gov, is the place to look for this data. In this article, we will focus on national-level information and provide a few examples of how the data can be used to learn more about the employment and inflation trends in key sectors.

width=450More than three-quarters of corrugated boxes and other corrugated materials are used to satisfy the need for packaging in the nondurable goods sector. So, understanding price and employment trends in this sector can help us understand the broad range of customers who manufacture and package these fast-moving goods.

width=450Currently, 4.2 million workers are employed in the nondurable goods sector. Employment growth is shown as year-over-year change by month and as an average annual rate of growth in the top chart at right. First, notice that growth was continuous over the entire period. During 2018, employment grew less rapidly than in 2017, ranging between 0.7% and 1.2% during the year. During the first four months of this year, growth has held up in the narrow range of 1.0% to 1.1%. During the 2017–2019 period, total nonfarm employment growth rose at a steady rate of 1.4% to 1.9%, outpacing nondurable goods growth, which ranged between 0.7% and 1.6% over the same period.

Within the nondurable goods sector, food represents the largest single market for corrugated packaging. Employment in the food industries amounts to 1.6 million currently, which is 39% of total nondurable goods manufacturing. Here, the employment growth trend is more favorable for growth in packaging demand. Employment grew consistently between 2017 and 2019, but at a higher rate. However, month-to-month growth has been modest since the fourth quarter of last year. This reflects the growing inventories of manufactured goods, which are slowing production growth and the need for more workers.

width=450Another way to learn about conditions in specific industries is to look at the pace at which prices for those industries’ goods are rising. BLS publishes very detailed information monthly on price increases that are summarized into the Producer Price Index (PPI). Last year, the PPI advanced by 2.8%, and for the first quarter of this year, it has grown at an average rate of 2.0% per year.

Comparing the overall PPI growth to that of food can help us understand conditions in the food sector. The rate of inflation growth in the food industry is shown in the bottom chart on Page 4. Food prices fell during the second half of last year and averaged only 0.2% growth on an annual basis.

Food prices stabilized by the end of last year and have picked up so far this year, averaging 0.7% growth during the first quarter. However, food prices are still growing at a slower rate than the overall 2.0% PPI growth during the first quarter.

width=450The BLS data allows the user to zero in on the price inflation for a specific commodity. As an example, the chart above shows that price inflation growth for processed poultry follows a very different path than does the overall food sector. Starting in September 2017, poultry prices fell substantially. That weakness continued throughout last year, dropping by as much as 10% year over year last summer. On an annual basis, the decline averaged 6.8%. Processed poultry prices have stabilized during the first quarter of this year. For the past two years, feed prices have also declined because of bountiful grain harvests. Less-expensive feed encouraged more rapid poultry growth, and that excess supply translated into lower prices for processed poultry.

What is important to remember is that the BLS monthly employment and inflation data is provided at such a detailed level that users of the data can likely find a detailed product that closely matches a customer’s business focus. That, in turn, provides an independent corrugated converter with the opportunity to learn more about a customer’s business conditions to be better prepared for customer discussions. Go to www.bls.gov to get started.


PortraitDick Storat is president of Richard Storat & Associates. He can be reached at 610-282-6033 or storatre@aol.com.