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As 2006 came to an end, the U.S. manufacturing sector was struggling with the problems of the Big 3 auto makers, the decline in residential construction levels and concerns about the war in Iraq. But the overall U.S. economy continued to expand at a moderate pace, and our forecast calls for improvement in moldmaking activity as this year progresses. Global demand for molded products is expanding in the long-run and materials prices have declined. These factors will promote increased capital investment for new injection molding machines and tooling in 2007.

After trending downward for most of 2006, moldmakers’ expectations about future business conditions improved dramatically as 2006 came to an end. Conditions will improve in 2007, but it may take until mid-year. Chart courtesy of Mountaintop Economics & Research, Inc.

The crucial sub-index for New Orders of molds was 55.4 in November, which means that the amount of new business increased moderately when compared with the previous month. Future gains in the total MBI depend on steady increases in new orders of molds. Production levels also were better, as the latest Production sub-index was 51.8. The Employment component was 48.2, which indicates that overall payrolls were flat-to-down in recent weeks. The industry’s overall backlog was also flat-to-down, as the Backlog sub-index registered 48.2 in November.

The Mold Prices sub-index for the latest month was 46.4. This means that the prices received for new molds were a bit lower on average last month. The prices paid for materials increased again, as the latest sub-index for Materials Prices was 60.7.

After a flat year in 2006, our Injection Molding Business Index (a measure of production levels for injection molders) will post a solid gain of 5 percent in 2007. Consistent gains in the Mold Business Index depend on sustained growth of 4 to 5 percent in the output of injection molded products. Output of these products slowed in the second half of 2006, but this trend will be reversed in the near future. The trend in the moldmaking industry lags the trend in the processing sector by about six months.