Activity Levels Indicate Uptrend Starting
55.2 Total Mold Business Index for September 2009 The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries
For the first time in two years, activity levels for North American moldmakers registered a quarterly increase when compared with the previous quarter. The MBI value for the third quarter averaged a solid 53.1. It certainly takes more than one quarter to make a reliable trend, but for the first time in a long while it appears that the bottom has been hit and an uptrend can finally start.
September's MBI was 55.2, a modest 1.3-point decrease from August's 56.5, but an 8.5-point increase from last September. September's value is consistent with a slow, gradual expansion in the overall U.S. economy. All of the measures of business activity were moderately stronger when compared with the previous month. The downward pressure on Mold Prices increased in September, while Materials Prices were flat-to-higher. Future Expectations sustained an optimistic tone in September, registering a solid 73.8. Production activity continued to expand, with a solid 61.9. Backlog is 54.8, this increase combined with the rise in production levels indicates that the health of the mold industry is slowly improving. The Mold Prices sub-index is 38.1, so there is still pressure from customers to lower the price of new molds.
Overall U.S. GDP expanded 3 percent in the third quarter and it is expected to grow another 2 to 3 percent in the fourth, spurred by the enormous monetary and fiscal stimulus from the Federal government, as well as a significant adjustment in inventory levels of the manufacturing sector. The Fed's aggressive efforts have lowered borrowing costs and eased some of the credit crunch, but it remains difficult to obtain credit. However, this situation is gradually improving. The early part of the current business cycle recovery will be slow and painful for some. Real GDP is forecast to expand by a pedestrian 2 percent in 2010. High unemployment and weak wage growth will persist through the first half of next year. The U.S. economy will also be buffeted by at least one more wave of foreclosures, a rising number of commercial mortgage loan defaults, a few more bank failures, and spiraling budget problems at state and local governments.
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