Activity Levels: Steady-to-Better

Mold Business Index for Ausust 2005

Activity levels for North American moldmakers were steady-to-better during the past month, but the supply-related issues (materials prices and supplier delivery times) continue to weigh on the industry. Based on the latest survey for our Mold Business Index (MBI), the MBI value for August is 54.3. This represents a 2.4 percentage point decrease from the July value of 56.7. The New Orders, Production, Employment, and Backlog sub-indices all advanced in the latest month. And once again, the negative factors were rising Materials Prices and longer Supplier Delivery Times. The Future Expectations sub-index stayed at a high level, but slipped a bit from the previous month’s reading. It was 74.3 in August.

The latest sub-index value for New Orders of molds is 58.6, which means that the number of new orders was once again higher when compared with the previous month. Production activity is strongly correlated to the trend in new orders, and a Production sub-index value of 55.7 indicates that there was a moderate increase in mold output in recent weeks.

The Employment component for August is 62.9, which means that the total number of workers in the industry increased again during the past month. The industry’s total backlog was also a bit longer, as the August Backlog sub-index is 54.3. The number of offshore orders for new molds was unchanged last month. The Export Orders sub-index is exactly 50.0.

The Mold Prices sub-index for August is 51.7. This means that prices for new molds were steady-to-higher when compared with the previous month. But unfortunately, the prices paid for materials are rising even faster, as the latest sub-index for Materials Prices is 72.9. Supplier Delivery Times were a bit slower overall, with this sub-index posting a value of 44.3 in August.

The Future Expectations sub-index for August indicates optimism about the coming year, just a bit less than last month. The latest value is 74.3. There was no significant change in the aggregate capital investment plans for the future.

The short-term effects of Hurricane Katrina notwithstanding, our forecast still calls for gradually rising activity in the plastics manufacturing and tooling industries through the end of 2006. This will result in a gradual, but steady gain in the MBI data in the coming months. Plastics processors are still in a cyclical upturn in spending on new capital equipment. This combined with the continued rise in overall spending on industrial equipment in the U.S. indicates that the demand for new molds will remain in a gradual uptrend for the foreseeable future. Most of the major economic indicators suggest that plastics manufacturing levels in the U.S. increased modestly in recent weeks, and the U.S. economy’s crucial leading indicators are still in a sustainable growth phase.

August 2005
  %
Positive
%
Equal
%
Negative
Net %
Difference
Sub-Index

New Orders
Production
Employment
Backlog
Export Orders
Supplier Deliveries
Materials Prices
Mold Prices
Future Expectations

40
34
31
23
0
0
46
14
54
37
43
63
63
100
89
54
75
40
23
23
6
14
0
11
0
11
6
17
11
25
9
0
-11
46
9
48
58.6
55.7
62.9
54.3
50.0
44.3
72.9
51.4
74.3
Total Mold Business Index for August 2005: 54.3. The total Mold business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries. The MBI is based on a monthly survey from which a diffusion index is calculated based on 50.0. A value above 50.0 indicates that business activity expanded, while a value below 50.0 means that business levels declined.

Related Content

Business Activity Continues to Rise

Mold Business Index for September 2007