Evidence Shows Cyclical Bottom Hit

41.3
Total Mold Business Index for May 2009
The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.

The Mold Business Index (MBI) for March is 41.3. This is unchanged from the February value of 41.3, and it is 4.7 points higher than the MBI value of 36.6 from March of last year. Supplier Delivery Times continue to get faster and Materials Prices declined on average. Decreases were registered in all of the other core MBI components, and the Future Expectations component stayed at a pessimistic level of 36.4 in March.

The recession in the U.S. economy is still intense, but there is mounting evidence that it has finally hit the cyclical bottom. The recent gains in the financial markets suggest that investors increasingly believe that the worst is now behind us. The retail sector has also firmed in the period since the lackluster Christmas season. Consumers are still worried about the future, but their spending patterns are stabilizing. Even vehicle sales appear to have found a low-point.

A couple of other factors that portend a brighter outlook are that energy prices are much lower now than they were at this time last year, and the low interest rates have resulted in a surge of refinanced mortgages with lower payments. New orders for capital goods rebounded in the first quarter of this year, and this bodes well for future investment in business equipment. All of this means that demand for new molds and tooling will remain sluggish for another quarter of two, but it will start to rebound in late 2009 and throughout 2010 and 2011.

The sub-index for New Orders of molds hit a cyclical low of 25.0 in March. This is a disconcertingly low level of new orders, but history shows that the number of orders typically rises in the second and third quarters of the year. The Employment component is 38.6, which means that there was another drop in overall payrolls in the latest month. The Backlog component is 31.8 in March. The Mold Prices sub-index for the latest month is 22.7, and many of the survey respondents reported that there is increasing pressure from customers to lower the price of new molds.

The most-cited problem confronting North American moldmakers in recent weeks is the recession in the U.S. economy. Other problems receiving multiple mentions were: receiving payment for work completed in a timely manner; and the trade policies of the U.S. government.

March 2009

%
Positive

%
Equal

%
Negative
Net % Difference
Sub-
Index
New Orders
14
22
64
-50
25.0
Production
14
50
36
-22
38.6
Employment
5
68
27
-22
38.6
Backlog
18
27
55
-37
31.8
Export Orders
5
95
0
5
52.3
Supplier Deliveries
23
77
0
23
61.4
Materials Prices
0
86
14
-14
43.2
Mold Prices
0
45
55
-55
22.7
Future Expectations
18
36
46
-28
36.4

Related Content

Total Mold Business Index for May 2005: 50.4

Activity levels for North American mold makers were mostly better in recent weeks, but supply-related issues (materials prices and supplier delivery times) were also more pronounced.