Report on the state of packaging – December 2016

Feb 06, 2017

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Four-month survey of the packaging industry. Situation as of early December 2016. Plinio Iascone

Below is a snapshot of the performance of the manufacturing sectors that consume the most packaging, subdivided into the macro-areas of food and non-food. A look at the corresponding performance of the packaging sector itself will follow.
The performance data on the various manufacturing sectors featured below have been supplied either by sector trade associations, Istituto Italiano Imballaggi or Prometeia.

The food industry
(food and beverage)
According to Prometeia’s analysis, the Italian food industry ended 2016 with approximately 1% production growth.
Istituto Italiano Imallaggio’s early estimates for 2016 largely indicate stability in production but a drop in foreign trade, especially beverage exports. Food exports are growing, while imports of both food and drinks fell. These trends are based on ISTAT January-September data. Consumption appears to have remained stable.

Pharmaceuticals (excluding OTC)
In 2016, Italian public health expenditures went down by 4.7% from the previous year. However, this reduction was counterbalanced by significant growth (+8.7%) in drugs purchased from local healthcare providers and distributed by pharmacies for the national health service.

Fashion system
According to Prometeia, Italy’s fashion industry failed to expand in 2016, penalized, firstly, by the crisis of emerging markets and an underperforming US market. The global slowdown will presumably bring a 0.7% drop in exports, compounding 2015’s -3.5%.

Cosmetics and perfumes
After closing 2015 with 5% production growth, the preliminary data for 2016 suggests that the sector has grown by 2% during that year. Exports grew by approximately 4%, while imports also fared well at +2%.
Domestic consumption is still going strong (around +1.5%).

Furniture and decor
According to this industry’s trade association, in 2016 the global furniture sector saw an interruption to its very positive 2015 growth. This trend is expected to continue in 2017. The recovery is forecasted for the two-year period 2018-2019.
The situation is better in Italy: following a period of crisis, a slow recovery began in 2016, with domestic consumption growing by 1.3% thanks to consumer tax incentives for buying furniture and modest export growth.
Globally, 2017 production in this sector should gain stronger footing, estimated at +1.5%, mainly driven by sales in Italy.

Chemical products
As of the time of printing, Federchimica has still not published its 2016 updates. We have thus used the 2015 data here, the most updated data currently available. In 2015, Italian production showed growth 1% over that of 2014. Foreign trade closed the year with net export growth (+3.5%) and significant import growth (+3%). The most significant change in 2015 was the stirring of the domestic market as the recovery began in earnest.
Machinery (agricultural, machine tools, machinery for special uses, energy machinery)
According to Prometeia, the performance of this sector is still severely hampered by the crisis of emerging markets, as for the fashion industry. The trend for this sector is also negative.

Electric appliances
No signs of growth for electric home appliances either. Italian operators are struggling to keep up with their competitors.

Construction materials
The first signs of recovery have been confirmed, with +1% growth in 2016. Construction, as is known, also includes building materials (cement, concrete, bricks, rebar, etc.).

Economic overview

According to Confindustria
With Italy’s GDP at +0.3% in the third quarter, in line with the CSC’s estimate, in the fourth quarter the indicators point to another slowdown (+0.1%). The GDP for 2016 is +0.8%. Industry grew by 0.6% in October, after -0.8% in September, making the fourth quarter growth rate +0.6%.
According to Prometeia
Italian manufacturing closed 2016 with 1.2% turnover growth, at constant prices, approximately 7 billion Euro less than forecasted in May.
The stunted expansion is due to a climate of uncertainty that has penalized domestic demand.
Over the next two years, domestic demand should sustain a slight acceleration of production growth, at an estimated annual average of 1.5%.
At a glance, Italian manufacturing as of late 2016 shows 1.2% production growth (+2.7% in 2015), exports growing by 0.9% (+1.1% in 2015) and import growth of 3.6% (+4.6% in 2015).
Domestic demand growth at the end of 2016 was at 1.6%, compared to 2.6% in 2015.
The growth prospects for 2017 delineate 1.4% production growth, with foreign trade up by +2.2% for exports and +3% for imports. Consumption should see +1.5% growth.
Italian enterprises have managed to take advantage of the opportunities offered by an unfavorable international climate, outperforming their main European competitors. In the first six months of the year, Italy’s share of global trade grew, confirming the superior resistance of Italian exports to lulls in global demand.
During the next two years (2017-2018), in a scenario of recovering foreign markets, domestic demand will drive a modest acceleration of the growth of manufacturing.

(This report is based on data supplied by the Istituto Italiano Imballaggio database)

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