Recession Continues, but It Is Moderating

The Mold Business Index (MBI) for April, 2009 is 39.6. This is a 1.7-point decrease from the March value of 41.3, and it is 10.4 points lower than the MBI value of 50.0 from April 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. The Future Expectations component escalated to the mostly-neutral level of 46.9 in April.

The worst of the economic and financial crisis is over. Businesses are clearing out unwanted inventories, global financial markets continue to rally, and even the banking system seems to be on the mend. The recession continues, but it is moderating, and an end to the severe downturn is coming into view. Consumer confidence has improved from its record low earlier this year, and retailing has stabilized. Households are buoyed by lower energy prices, mortgage refinancing and bigger tax refunds.

Although the recession should end by the end of 2009, the next recovery will be muted through 2010. Recoveries have historically been powered by the interest rate-sensitive housing and auto industries. Although housing construction and vehicle sales in coming months will rise off their current record lows, the gains will be limited. There are still a lot of vacant homes, and there is very little pent-up vehicle demand. Global economies will not recover quickly from their recessions, so U.S. exports will struggle to gain momentum.

Our Injection Molding Business Index (a measure of production levels for injection molders) dropped precipitously in the first quarter of 2009 when compared with the previous year. The amount of decline in this indicator overstated the amount of the decrease in the actual market demand for these products, but the Index is not expected to recover until the third quarter of this year. After a drop of 15 percent in 2008, the annual change in our Index is forecast to be flat-to-slightly-higher in 2009. Most of this expected growth will occur in the second half of this year. 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 lags the trend in the processing sector by about six months.

April 2009
	% Positive	% Equal	% Negative	Net % Difference	Sub- Index
New Orders	25	25	50	-25	37.5
Production	19	25	56	-37	31.3
Employment	13	56	31	-18	40.6
Backlog	13	24	63	-50	25.0
Export Orders	6	88	6	0	50.0
Supplier Deliveries	13	81	6	7	53.1
Materials Prices	0	81	19	-19	40.6
Mold Prices	0	44	56	-56	21.9
Future Expectations	6	81