Activity Levels Remain Subdued

Activity levels for North American moldmakers remained subdued as the summer ended. Based on the latest survey for our Mold Business Index, the MBI value for September was 43.9. This is a 3.8 percentage point decrease from the August value of 47.7. All of the components that comprise the MBI registered declines when compared with the previous month. There was one ray of hope however, as Materials Prices held mostly steady in the latest month.

High energy prices, problems with the Big 3 automakers and growing concerns about the war in the Middle East all weighed on the U.S. manufacturing sector in recent months. But the U.S. economy continues to expand at a respectable rate, and our forecast calls for a return to gradual improvement in moldmaking activity later this year and into the next. Global demand for molded products is slowly expanding, and the capacity utilization rates for most sectors of the North American injection molding industry are also on the rise.

The crucial sub-index for New Orders of molds was 46.2, which means that the amount of new business decreased a bit when compared with the previous month. Production levels also decreased moderately, as the latest Production sub-
index was 44.2. The Employment component was 44.2, which indicates that overall
payrolls were down in recent weeks. The industry’s overall backlog was also shorter, as the Backlog sub-index registered 38.5.

For the first time in many months the prices paid for materials held mostly steady, as the latest sub-index for Materials Prices was 51.9. Supplier Delivery Times were also a little shorter on average, as this sub-index posted a value of 46.2. The number of offshore orders for new molds decreased, as the Export Orders sub-index was 44.2.

The Future Expectations sub-index was 50.0. Technically, this is not a negative reading, but a value of 50 matches the lowest reading ever for this component. And there was a small decrease in the reported capital investment plans.

Our outlook is for energy and materials costs to decrease gradually in the coming months. And we still expect that our Injection Molding Business Index will continue to expand during the next few quarters. It is predicted to register growth of at least 5 percent in 2006. Consistent gains in the MBI depend on sustained growth of 4 to 5 percent in the output of injection molded products.

September 2006
	% Positive	% Equal	% Negative	Net % Difference	Sub- Index
New Orders	23	46	31	-8	46.2
Production	19	50	31	-12	44.2
Employment	15	58	27	-12	44.2
Backlog	15	46	39	-24	38.5
Export Orders	0	88	12	-12	44.2
Supplier Deliveries	4	84	12	-8	46.2
Materials Prices	8	88	4	4	51.9
Mold Prices	8	77	15	-7	46.2
Future Expectations	35	30	35	0	50.0
Total Mold Business Index for September 2006: 43.9. The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.