11/1/2015 | 1 MINUTE READ

Aerospace and Packaging

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Aerospace production should grow and packaging needs should accelerate into 2016.

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Aerospace Production Should Grow in 2016
While the aerospace industry is global and one of the largest export industries in the U.S., consumer trends in air travel correlate reasonably well with aerospace production.

System revenue passenger miles (SRPM) is a measure of the number of miles flown by each paying customer. In June, the number of SRPM was the second highest in history. Compared with one year earlier, SRPM grew by 4.0 percent, which was the fastest rate of growth since April. The annual rate of change continued to accelerate and is now growing at 3.0 percent, which was the fastest rate of growth since September 2011.

Consumer spending on airfares also has been growing, however, the rate of growth in spending has slowed, despite the accelerating growth in miles flown.

The net result is that aerospace industrial production should continue to grow in 2016. That rate of growth may slow somewhat as the global economy cools, but the backlog of orders at Boeing and Airbus should keep the industry busy with plenty of work.

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Packaging Needs Should Accelerate into 2016
A number of trends are pointing toward to increased need for packaging. First, real disposable income has had solid month-over-month growth in 2015. In almost every month, income has grown at the historic average, which has been an improvement over previous years. The annual rate of change has grown faster and faster almost every month this year.

The accelerating growth in income is a positive sign for consumer spending. The two are growing at a virtually identical annual rate in 2015. For consumer spending, that means it is growing at the fastest rate in virtually a decade. This consumer spending is a good indicator of packaging needs, because so many of the goods purchased include significant amounts of associated packaging. And many companies continue to try to make their packaging distinct from that of their competition. This means packaging requirements are getting more complex in addition to volume increasing in the short term.

In particular, food and beverage production is growing at an accelerating rate. Other than a brief period in 2013, the current rate of growth is the fastest in more than eight years.

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