Overall Moldmaking Activity Levels: Rebounding

After a brief period of decline in February, activity levels for North American moldmakers rebounded in recent weeks. Based on the latest survey for our Mold Business Index (MBI), the MBI value for March is 52.1. This represents a 5.8 percentage point increase from the February value of 46.3. The crucial New Orders and Production sub-indices both advanced in the latest month, and increases also were registered in the measures for Employment and Export Orders. On the downside, there was another strong rise in Materials Prices, and Supplier Delivery Times continued to lengthen. The Future Expectations sub-index remained quite strong at 78.2.

The latest sub-index value for New Orders of molds is 53.6, which means that the number of orders increased moderately when compared to the previous month. The predominant trend in the new orders data in recent months has been a gradual rise, and continued improvement in this component is necessary to generate consistent gains in the other components. Production activity in March also increased, as the latest Production sub-index is 54.5.

The Employment component for March is 59.1, which indicates that the total number of workers in the industry increased significantly in recent weeks. The industry’s total backlog was steady-to-down, as the March Backlog sub-index is 47.3. And the long-awaited, positive effects of a low value for the U.S. dollar are finally starting to show up in the data, as the number of offshore orders for new molds increased in recent weeks. The Export Orders sub-index is 53.6.

The Mold Prices sub-index for March is 50.9. This is the second time this year that this indicator has registered a value above the 50-level, which means that the long-term downtrend in mold prices is stabilizing and could soon start to rise. But unfortunately, the prices paid for materials continue to rise much faster than mold prices are. The latest sub-index for Materials Prices came in at 76.4. And Supplier Delivery Times lengthened again, as this sub-index posted a value of 44.5 in the latest month.

The Future Expectations sub-index for March indicates that moldmakers remain optimistic, as the latest value was 78.2. This rise in optimism was matched by a small, but noticeable increase in the reported aggregate capital investment plans for the future.

Foreign competition remained as the most-cited problem that currently plagues the moldmaking industry. Other problems receiving multiple mentions were: the soaring costs of materials, healthcare and energy; less favorable payment terms; demand for fast deliveries; and ill-conceived U.S. trade policies.

March 2005
	% Positive	% Equal	% Negative	Net % Difference	Sub-Index
New Orders Production Employment Backlog Export Orders Supplier Deliveries Materials Prices Mold Prices Future Expectations	44 36 25 35 7 9 53 15 60	20 37 68 25 93 71 47 72 36	36 27 7 40 0 20 0 13 4	8 9 18 -5 7 -11 53 2 56	53.6 54.5 59.1 47.3 53.6 44.5 76.4 50.9 78.2
Total Mold Business Index for March 2005: 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.

Our forecast calls for gradually rising activity in the plastics manufacturing and tooling industries throughout 2005. This will result in a continuation of the overall trend in the MBI data in 2004, which registered a gradual, but steady gain. Plastics processors are still in a cyclical upturn in spending on new capital equipment, and the recent increase in total spending on industrial equipment in the U.S. suggests that the total demand for new molds will remain in an uptrend for the foreseeable future. All of the major economic indicators suggest that overall manufacturing levels in the U.S. increased gradually in recent weeks, and the U.S. economy’s crucial leading indicators are still in a sustainable growth phase.

This means that our Injection Molding Business Index will continue to expand during the next few quarters. Following a gain of 3 percent in 2004, this Index is forecast to increase 5 percent in 2005. Consistent gains in the Mold Business Index depend on sustained growth of 4 percent 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. So as demand for molded products expands in the coming months, orders for new molds will continue to rise.

*The Mold Business Index is based on a monthly survey of North American moldmakers. Mountaintop Economics & Research, Inc. conducts the survey, and then calculates a diffusion index based on 50.0. A value above 50.0 for the MBI indicates that business activity expanded in the previous month, while a value below 50.0 means that business levels declined.