Activity Levels Holding Steady

Mold Business Index for March 2006

New orders for molds rebounded as the first quarter came to a close after suffering declines in the first two months of this year, but supply conditions remain a problem for many moldmakers. According to our latest survey, overall business activity for North American moldmakers held mostly steady in March. Our MBI value for March was 49.3. This is a 9.1 percentage point increase from the February value of 40.2. There was a heartening increase in the number of New Orders in March, but this positive news was offset by a slowdown in Supplier Deliveries and the persistent rise in Materials Prices. The Future Expectations component rebounded from a low-point in February to a respectable 70.8 in March.

Despite a shaky start to this year, our forecast calls for improving market demand for new molds as 2006 progresses. Some of the decline in the first quarter was attributable to seasonal factors. The historical data show that the MBI often registers a decrease in overall activity in the early months of the year.

During the next few months, capital investment for new equipment in the plastics industry will regain its footing, and the trend in overall market demand for new molds will return to a gradual upward trajectory for the remainder of this year. Plastics processors remain in a cyclical upturn in spending on new capital equipment and tooling. Most of the major economic indicators show that plastics manufacturing levels in the U.S. increased in recent weeks, and the U.S. economy’s crucial leading indicators are still in a sustainable growth phase. The major threat to this forecast is the high price of petroleum and other energy products.

The latest sub-index for New Orders of molds was a solid 58.3, which means that the amount of new business in March increased when compared with the previous month. Total production activity was unchanged, as the latest Production sub-index was exactly 50.0. The prices paid for resins and steel continue to rise, as the latest sub-index for Materials Prices stayed elevated at 72.9. Supplier Delivery Times slowed again, as this sub-index posted a value of 39.6 in March.

Barring a major supply disruption, we expect energy and materials costs to continue gradually downward in the coming months. This means that our Injection Molding Business Index should continue to expand during the next few quarters. Following an estimated gain of 3 percent in 2005, this Index is forecast to register growth of at least 5 percent in 2006.

March 2006

%
Positive

%
Equal

%
Negative
Net % Difference Sub-
Index
New Orders
38 41 21 17 58.3
Production
25 50 25 0 50.0
Employment
13 66 21 -8 45.8
Backlog
29 42 29 0 50.0
Export Orders
4 96 0 4 52.1
Supplier Deliveries
0 79 21 -21 39.6
Materials Prices
46 54 0 46 72.9
Mold Prices
13 70 17 -4 47.9
Future Expectations 54 33 13 41 70.8
Total Mold Business Index for March 2006: 49.3. The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.

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