Business Conditions Mostly Steady

For the third consecutive month, the headline number for our Mold Business Index (MBI) in July indicates that business conditions for North American mold builders were mostly steady when compared to the previous month. And as was the case in June, a more thorough analysis of the data reveals that there was more good news than bad in recent weeks. The latest value for the MBI is 49.3. This is a modest 0.7-percentage point decrease from the June value of 50.0. A solid rise in the crucial New Orders component was offset by a seasonal drop in overall Production levels. The Future Expectations component remained at an optimistic 60.0 in July.

For the second straight month, the sub-index for New Orders of molds posted a solid increase. It was 56.0 in July. Future gains in the total MBI depend on continuing increases in new orders of molds. The Backlog component was modestly lower at 46.0 in July. Production levels were also lower, as the latest Production sub-index was 44.0. The Employment component was 50.0, which means that there was no change in overall payrolls last month.

The Mold Prices sub-index for the latest month was 46.0. This means that the prices received for new molds continue to fall, but the rate of decline is decelerating. Several respondents again reported that overcapacity (and the low mold prices that this causes) was the biggest problem currently affecting the North American mold industry. The prices paid for materials increased again, as the latest sub-index for Materials Prices was 60.0. Supplier Delivery Times were slower for a few respondents, as this sub-index posted a value of 48.0. There was a small rise in the number of offshore orders for new molds, as the Export Orders sub-index was 52.0.

Overall global demand for plastics products is rising gradually, and capacity utilization rates for injection molders will continue to trend slowly upward in the coming months. High energy prices are still a wild card in the forecast. The rising cost of gasoline will put a crimp on consumer spending and sales of autos in the near-term, but high gas prices should spur market demand for new models of more fuel-efficient vehicles. This could be a boon to the mold industry in the long-run. The residential construction sector will remain a drag on overall economic growth until at least the spring of 2008.

July 2007
	% Positive	% Equal	% Negative	Net % Difference	Sub- Index
New Orders	48	16	36	12	56.0
Production	16	56	28	-12	44.0
Employment	12	76	12	0	50.0
Backlog	32	28	40	-8	46.0
Export Orders	8	88	4	4	52.0
Supplier Deliveries	8	80	12	-4	48.0
Materials Prices	20	80	0	20	60.0
Mold Prices	4	84	12	-8	46.0
Future Expectations	32	56	12	20	60.0
Total Mold Business Index for July 2007: 49.3. The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.