Business Activity Continues to Rise

Business activity levels for North American mold builders continued to rise gradually in recent weeks. Our Mold Business Index (MBI) for September is 53.2. This is a 0.7-percentage point increase from the August value of 52.5.

After a few weeks of consolidation, the sub-index for New Orders of molds jumped up to 63.9 in September. According to our index, orders for new molds have increased in three of the past four months. Future gains in the total MBI depend on continuing increases in new orders of molds. Production levels expanded again, as the latest Production sub-index was 61.1. The Employment component was 55.6, which means that there was a small increase in overall payrolls last month. The Backlog component was also moderately higher at 55.6 in September. The Future Expectations value escalated to 72.2 in September.

Despite all of the recent hand-wringing about the sub-prime mortgage mess and the continued recession in the residential construction and real estate sectors, most of the manufacturing indicators have registered slow, but steady growth in recent weeks. The low value of the U.S. dollar vis-à-vis the other major currencies has pushed export growth for U.S.-made goods. High energy prices are still a wild card in the short-term forecast, but oil prices are down moderately from their recent peaks. The equities markets have regained momentum recently, and this too bodes well for future economic activity.

Global demand for plastics products is still rising, and capacity utilization rates for the plastics industry in the U.S. remain at a level that is higher than the long-term historical average. Our Injection Molding Business Index (a measure of production levels for injection molders) actually declined modestly during the second quarter, but it remains in the early stages of the next recovery phase.

Our forecast continues to call for a moderate gain of 3 percent for all of 2007. This rate of growth is just slightly below the level required for long-term improvement in the market for new molds. 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 also lags the trend in the processing sector by about six months.

September 2007
	% Positive	% Equal	% Negative	Net % Difference	Sub- Index
New Orders	56	16	28	28	63.9
Production	44	34	22	22	61.1
Employment	28	55	17	11	55.6
Backlog	39	33	28	11	55.6
Export Orders	0	89	11	-11	44.4
Supplier Deliveries	0	78	22	-22	38.9
Materials Prices	22	78	0	22	61.1
Mold Prices	6	94	0	6	52.8
Future Expectations	44	56	0	44	72.2
Total Mold Business Index for September 2007: 53.2. The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.