Activity Levels: Steady to Better

Mold Business Index For October 2005

Activity levels for North American moldmakers were steady-to-better during October, but the rate of improvement decelerated when compared with the previous month. Based on the latest survey for our Mold Business Index (MBI), the MBI value for October is 52.3. This is a 5.0 percentage point decrease from the September value of 57.3. The New Orders, Production and Employment sub-indices all advanced moderately in the latest month. And yet again, there was a reported rise in Materials Prices and longer Supplier Delivery Times. The Future Expectations sub-index declined modestly, but it remained at a level that indicates there is continued optimism amongst moldmakers. It was 71.9 in October.

Our forecast calls for rising activity in the plastics manufacturing and tooling industries through most of 2006. This will result in an overall rise in the MBI data. Most of the major economic indicators suggest 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 biggest threat to this forecast is the high price of petroleum and other energy products.

Barring any major supply disruption, we expect energy and materials costs to moderate in the coming months. And this means that our Injection Molding Business Index (a measure of production levels for injection molders) 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. Consistent gains in the MBI depend on sustained growth of 4 to 5 percent in the output of injection molded products. The trend in the moldmaking industry also lags the trend in the processing sector by about six months.

The most-cited problem confronting North American moldmakers at the present time is once again offshore competition, particularly from China. Other problems receiving multiple mentions were: a shortage of skilled labor; the high costs of materials; less favorable payment terms; longer delivery times for materials; and, ill-conceived U.S. trade policies.

A closer analysis of the data reveals that the latest sub-index for New Orders of molds is 53.1, which means that the number of new orders was steady-to-higher when compared with the previous month. Thus, the trend in the new orders data this year remains on an upward trajectory. Production activity also increased in October, as the latest Production sub-index is 59.4.

The Mold Prices sub-index for October is 51.6. This means that overall prices for new molds were firm when compared with the previous month, although several moldmakers reported that there is still very strong pricing pressure in the market.

October 2005



%
Positive

%
Equal

% Negative
Net % Difference
Sub-Index
New Orders
31
44
25
6
53.1
Production
34
50
16
18
59.4
Employment
25
66
9
16
57.8
Backlog
22
56
22
0
50.0
Export Orders
0
100
0
0
50.0
Supplier Deliveries
0
87
13
-13
43.8
Materials Prices
38
62
0
38
68.8
Mold Prices
16
71
13
3
51.6
Future Expectations
53
38
9
44
71.9
Total Mold Business Index for October 2005: 52.3. 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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