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After holding just above steady for three consecutive months, overall business activity for mold builders slowed in November. Chart courtesy of Mountaintop Economics & Research, Inc.

Business activity levels for North American mold builders eased a bit in the fourth quarter of 2007 with a 4.6-percentage point decrease from the October value of 51.1. Moderate decreases were registered in the Production, Employment, Supplier Delivery Times and Backlog components. One ray of positive news is that New Orders held steady overall. Materials Prices continued to rise, and yet the Future Expectations value elevated to 65.8 in November.

Most major indicators for U.S. manufacturing and construction sectors appear to be hitting their cyclical bottoms as 2007 ends. If the cyclical pattern holds, then it will take two to three more quarters for these sectors to recover and register consistent growth. The most likely scenario is that the total demand for new molds/tooling will remain close to the current level through the first half of 2008, and then start to grow more steadily in the second half. However, there is a downside risk to this outlook due to the unpredictability of the crude oil and natural gas markets. If energy prices rise, the chances of a recession in the U.S. economy will increase significantly. U.S. moldmakers will continue to benefit in the coming months from the low value of the U.S. dollar vis-à-vis the other major currencies, while the Canadian moldmakers will remain pressured by the exchange rate. The deceleration in the U.S. economy notwithstanding, global demand for plastics products is growing, and capacity utilization rates for the plastics industry remain at a strong level.