Activity Levels Ended 2006 on an Up-Tick

Activity levels for North American moldmakers ended 2006 on an up-tick. Based on the latest survey for our Mold Business Index (MBI), the MBI value for December was 52.1. This is a 1.8 percentage point increase from the November value of 50.3. The moderate rise in our Mold Business Index at the end of 2006 was corroborated by similar increases in the Purchasing Managers Index and in the new Metalworking Business Index that is being compiled and reported by our sister publication Modern Machine Shop. The recent trends in these indices suggest that the current slowdown in business conditions is at or very near a cyclical bottom, and activity levels will start to improve later this year.

Global demand for molded products is expanding in the long-run, and materials and energy prices have declined recently. There is also a strong probability that the Fed will begin to cut interest rates in the near future. All of these factors will promote increased capital investment for new injection molding machines and tooling in the second half of this year.

The Mold Prices sub-index for the latest month was a disappointing 37.5. This means that the prices received for new molds were lower on average last month. The prices paid for materials increased again, as the latest sub-index for Materials Prices was 60.0. Supplier Delivery Times were a bit shorter, as this sub-index posted a value of 55.0 in December. The Future Expectations sub-index for December was 65.0. This is down from the previous month’s reading, but it is still relatively optimistic.

After a decline of 4 percent in 2006, our Injection Molding Business Index (a measure of production levels for injection molders) will post a solid gain of 5 percent in 2007. Consistent gains in the Mold Business Index 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.

December 2006
	% Positive	% Equal	% Negative	Net % Difference	Sub- Index
New Orders	35	30	35	0	50.0
Production	30	50	20	10	55.0
Employment	10	70	20	-10	45.0
Backlog	50	15	35	15	57.5
Export Orders	0	100	0	0	50.0
Supplier Deliveries	10	90	0	10	55.0
Materials Prices	20	80	0	20	60.0
Mold Prices	0	75	25	-25	37.5
Future Expectations	35	60	5	30	65.0
Total Mold Business Index for December 2006: 52.1. The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.