Moldmaking Index Registers Strongest Expansion Since Second Quarter of 2019
Moldmaking Business Index: The Moldmaking Index moved strongly higher thanks to higher readings among all business activity components. Among the Index’s components, new orders reported the greatest expansion with a near 10-point increase.
Moldmaking surged this September, reaching a high of 55.1, driven by a rush of new orders activity and followed by expanding production, backlogs and employment activity. In absolute terms, every component of the Moldmaking Index increased with only export activity reporting a sub-50 reading, indicating generally good news. The increase in the supplier delivery reading—marking a slowing in deliveries—is often considered a sign of strong demand for upstream moldmaking inputs; however, the presently inflated figures more likely represent the overwhelming disruption of supply chains caused by COVID.
New orders and production activity lead Moldmaking Index higher: A historical analysis of the Moldmaking Index and its components shows that new orders activity is often a bellwether for advances in the other components of the Index. Should this relationship hold in the coming months it could prove to be a boon to the Moldmaking lndex through year-end.
A near 10-point advance in new orders activity was a substantial reason for the increase in the Index results. New orders readings above 50, which are also trending upward, signal that a growing proportion of survey respondents reported increasing new orders activity in September compared to August. The last time that new orders activity reported a similar reading was April of 2019.
September’s smaller expansion in production activity comes on the heels of a nearly 7-point increase in August. Should historical behaviors in the Index’s components prevail through the rest of 2020, the strong expansion in new orders this month could foretell expanding activity in the Index’s other metrics through the remainder of 2020.