Business Activity Levels Slipped Again

Business activity levels for North American moldmakers slipped again in March. The latest value for our Mold Business Index (MBI) was 44.0. This is a 4.3 percentage point decrease from the February value of 48.3. For the first quarter of 2007, the average for the MBI was 46.1. This was a modest improvement when compared with 45.2 that was the average from the first quarter of 2006, but it was a decline from 50.8 that was the average in the fourth quarter of last year. Most of the components that comprise the MBI were down in March when compared with the previous month. Materials Prices increased, Mold Prices slipped and Future Expectations eased back to 52.0 in March.

The Federal Reserve Board’s industrial production index for plastics product averaged 107.0 (2002=100) in the fourth quarter of 2006. This represented a gain of 3 percent when compared with the same quarter from the previous year, but it was down slightly from the third quarter of 2006. The plastics industry is currently progressing through a slower-growth phase of the current business cycle, and the monthly data are expected to just hold steady in the first half of 2007. The growth rate will begin to accelerate during the second half of 2007, and for the year as a whole, our forecast calls for an increase in the output of plastics products of 3 to 4 percent in 2007. This follows an expansion of 5 percent in 2006.

The sub-index for New Orders of molds was 44.0 in March, which means that the amount of new business decreased when compared with the previous month. Future gains in the total MBI depend on increases in new orders of molds. Production levels were also lower, as the latest Production sub-index was 42.0. The Employment component was 48.0, which indicates that overall payrolls were steady-to-down in recent weeks. The industry’s overall backlog shrank, as the Backlog sub-index registered 40.0 in March.

The Mold Prices sub-index for the latest month was 34.0. This means that the prices received for new molds declined again last month, and several respondents mentioned that lower mold prices were the biggest problem that is currently affecting the mold industry. The prices paid for materials increased again, as the latest sub-index for Materials Prices was 64.0. Supplier Delivery Times were longer, as this sub-index posted a value of 44.0 in March. There was a drop in the number of offshore orders for new molds, as the Export Orders sub-index was 46.0.

March 2007
	% Positive	% Equal	% Negative	Net % Difference	Sub- Index
New Orders	36	16	48	-12	44.0
Production	28	28	44	-16	42.0
Employment	16	64	20	-4	48.0
Backlog	32	16	52	-20	40.0
Export Orders	0	92	8	-8	46.0
Supplier Deliveries	0	88	12	-12	44.0
Materials Prices	28	72	0	28	64.0
Mold Prices	4	60	36	-32	34.0
Future Expectations	32	40	28	4	52.0
Total Mold Business Index for March 2007: 44.0. The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.