Activity Levels Ease Back

After nine consecutive monthly increases, activity levels for North American moldmakers eased back in November. Based on the latest survey for our Mold Business Index (MBI), the MBI value for November is 48.5. This is a 3.8 percentage point decrease from the October value of 52.3. It should be noted that in past years the MBI has had a tendency to decline in the month of November, so this latest month’s decrease may be more a result of short-term, seasonal factors rather than a long-term shift in business conditions. And despite this month’s decline, the overall trend in the data this year remains on an upward trajectory.

The latest sub-index for New Orders of molds is 48.5, which means that the number of new orders was modestly lower when compared with the previous month. Production activity was steady-to-higher in November, as the latest Production sub-index is 51.5. The Employment component for November is 57.6, which indicates that the total number of workers in the industry was still increasing during the past month. And with new orders down and production levels steady, the industry’s overall backlog declined. The November Backlog sub-index is 40.9.

The Mold Prices sub-index for November is 53.0. This means that overall prices for new molds were higher when compared with the previous month, although some respondents continued to report that there is still very strong pricing pressure in the market. The prices paid for resins and steel continue to rise, as the latest sub-index for Materials Prices is 75.8. Supplier Delivery Times were again slower, with this sub-index posting a value of 42.4 in November. At 62.1, the Future Expectations sub-index for November is at its lowest level in nearly two years.

The most-cited problem confronting North American moldmakers at the present time is offshore competition, particularly from China. Other problems receiving multiple mentions were: the high costs of materials; less favorable payment terms; longer delivery times for materials; a shortage of skilled labor; and, ill-conceived U.S. trade policies.

Despite the slowdown this month, our forecast calls for rising activity in the plastics manufacturing and tooling industries through the end of 2006. Plastics processors remain in a cyclical upturn in spending on new capital equipment and tooling. Most of the major indicators show that plastics manufacturing levels in the U.S. increased in recent weeks, and the U.S. economy’s crucial leading indicators are still in a sustainable growth phase. The biggest threat to this forecast for 2006 is the high price of petroleum and other energy products.

November 2005
	% Positive	% Equal	% Negative	Net % Difference	Sub-Index
New Orders	27	43	30	-3	48.5
Production	21	61	18	3	51.5
Employment	18	79	3	15	57.6
Backlog	15	52	33	-18	40.9
Export Orders	0	100	0	0	50.0
Supplier Deliveries	0	85	15	-15	42.4
Materials Prices	52	48	0	52	75.8
Mold Prices	15	76	9	6	53.0
Future Expectations	39	46	15	24	62.1
Total Mold Business Index for November 2005: 48.5. The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.