Business Mostly Steady

Business activity levels for North American mold builders were mostly steady in recent weeks. Our Mold Business Index (MBI) for October is 51.1. This is a 2.1-percentage point decrease from the September value of 53.2, but it is still in the positive range. Moderate gains in the Production and Backlog components were the bright spots in an otherwise stable set of responses. The negative news is that Supplier Delivery Times lengthened a bit, Materials Prices continued to rise and the Future Expectations value descended to 58.7 in October.

The recession continued in the residential construction and real estate sectors in October, but it is finally starting to look like the worst is behind us. It will take a few more quarters for these sectors to recover, but the residential construction data will start to be less of a drag on the overall economy during the next few months. Most of the major manufacturing indicators have stalled in recent weeks, but there is no strong evidence to suggest that the demand for manufactured goods will decline from its current level.

On the positive side, the low value of the U.S. dollar vis-à-vis the other major currencies has pushed export growth for U.S.-made goods. Global demand for plastics products is still rising, and capacity utilization rates for the plastics industry remain at a strong level. High energy prices are still a wild card in the short-term forecast, but at least for now the price of plastics resins has not risen as rapidly as the price of crude oil has.

Our Injection Molding Business Index (a measure of production levels for injection molders) posted a modest gain in the third quarter of this year, and it remains in the early stages of the next recovery phase. Our forecast continues to call for moderate growth of 3 percent for all of 2007.

The sub-index for New Orders of molds came in exactly at 50.0 in October, which means there was no change in the amount of new business when compared with last month. 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 56.5. The Employment component was 50.0, which means that there was no net change in overall payrolls last month. The Backlog component was again moderately higher at 56.5 in October.

The Mold Prices sub-index for the latest month was 43.5. This means that the prices received for new molds were lower. The prices paid for materials increased again, especially mold steel, as the latest sub-index for Materials Prices was 67.4. Supplier Delivery Times lengthened again, as this sub-index posted a value of 43.5.

October 2007
	% Positive	% Equal	% Negative	Net % Difference	Sub- Index
New Orders	35	30	35	0	50.0
Production	35	43	22	13	56.5
Employment	13	74	13	0	50.0
Backlog	35	43	22	13	56.5
Export Orders	0	100	0	0	50.0
Supplier Deliveries	0	87	13	-13	43.5
Materials Prices	35	65	0	35	67.4
Mold Prices	4	79	17	-13	43.5
Future Expectations	39	39	22	17	58.7
Total Mold Business Index for October 2007: 51.1. The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.