Decline Less Severe Than Expected

The Mold Business Index (MBI) for November is 42.5. This is a 4.7-percentage point decrease from the October value of 47.2. The Supplier Deliveries component registered a steady reading, while declines were reported in the other sub-indices. The Future Expectations component dropped to 47.6. The good news is that the sub-index for Materials Prices was 47.6 suggesting that, after many months of price increases, moldmakers paid less for materials last month.

The latest data from our MBI survey indicates that activity levels in the mold industry dropped again, but the decline was less severe than expected. The U.S. economy is in a recession, as most indicators of overall business activity in the fourth quarter are down sharply. Economic growth in the U.S. will be negative for the remainder of this year and the first few months of 2009. Thus, we have pushed our forecast for the cyclical low-point to occur in the second quarter of 2009. This means that the fundamentals for moldmakers and other durable goods manufacturers will improve during the second half of this year.

Total domestic output of injection molded products decreased by 10 percent in 2008, and the decline was accelerating as the year ended. Our forecast calls for market demand to stabilize in the first half of 2009 followed by a moderate increase in the second half of this year. Overall, total production of molded packaging products will rebound 2 percent in 2009.

The sub-index for New Orders of molds was 38.1 in November, indicating that new business levels were lower for the month. Production levels were also lower for the month, as the latest Production sub-index was 42.9. The Employment component was 40.5, which means that there was a decrease in overall payrolls last month. The sharp drop in New Orders resulted in a decline in the industry’s backlogs, as the Backlog component was 38.1 in November.

The Mold Prices sub-index for the latest month was 38.1 indicating that the prices paid for molds were lower. Supplier Delivery Times were steady, as this sub-index posted a value of exactly 50.0. There were fewer offshore orders for new molds, as the Export Orders sub-index was 45.2.

November 2008
	% Positive	% Equal	% Negative	Net % Difference	Sub- Index
New Orders	33	10	57	-24	38.1
Production	29	28	43	-14	42.9
Employment	14	53	33	-19	40.5
Backlog	29	19	52	-23	38.1
Export Orders	0	90	10	-10	45.2
Supplier Deliveries	5	90	5	0	50.0
Materials Prices	5	85	10	-5	47.6
Mold Prices	5	66	29	-24	38.1
Future Expectations	29	38	33	-4	47.6