Business Activity Holding Steady

Following the gains registered in the previous two months, business activity for North American mold-makers held steady in July. Based on the latest survey for our Mold Business Index (MBI), the MBI value for July was exactly 50.0. This is a 1.7 percentage point decrease from the June value of 51.7. The Future Expectations component improved to 69.0 in July indicating that moldmakers are much more confident at the present time than they were earlier this year.

The sub-index for New Orders of molds was exactly 50.0, which means that the amount of new business in July held steady when compared with the previous month. Production levels increased modestly, as the latest Production sub-index was 53.4. The Employment component was 56.9, which indicates that overall payrolls increased in recent weeks. The industry’s overall backlog was little changed, as the Backlog sub-index registered 46.6 in July.

The Mold Prices sub-index for July was 53.4. This means that the prices received for new molds were a bit higher on average in the latest month. But the prices paid for materials also increased, as the latest sub-index for Materials Prices was 65.5. Supplier Delivery Times were slower on average, as this sub-index posted a value of 44.8 in July. The number of offshore orders for new molds was steady-to-lower last month, as the Export Orders sub-index was 48.3.

The most significant factor in our forecast for U.S. manufacturing in general, and moldmaking in particular, is the escalating problems in the Middle East and the impact this conflict will have on world energy markets and consumer confidence. The supply and demand fundamentals portend a decline in energy prices in the near-term, so barring a supply disruption; our outlook is for energy and materials costs to decrease gradually in the coming months.

We still expect that our Injection Molding Business Index (a measure of production levels for injection molders) will continue to expand during the next few quarters. This Index is forecast to register growth of at least 5 percent in 2006. 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.

July 2006
	% Positive	% Equal	% Negative	Net % Difference	Sub- Index
New Orders	28	44	28	0	50.0
Production	31	45	24	7	53.4
Employment	28	58	14	14	56.9
Backlog	28	37	35	-7	46.6
Export Orders	3	90	7	-4	48.3
Supplier Deliveries	3	83	14	-11	44.8
Materials Prices	31	69	0	31	65.5
Mold Prices	24	59	17	7	53.0
Future Expectations	55	28	17	38	69.0
Total Mold Business Index for July 2006: 50.0. The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.