GBI: Moldmaking for May 2017 - 58.3

Registering 58.3 in May, the Gardner Business for moldmaking recorded its highest value in more than five years, driven by year-to-date figures for material prices, production and new orders. The production and new orders subcomponents increased by 12 percent and 10 percent, respectively, in the first five months of this year, using a 12/12 rate-of-change (ROC) calculation (this calculation adds the data for the latest 12 months and then divides that number by the sum of the values in the 12 months prior). These are two of the most significant components of the overall index and suggest strength in the moldmaking industry.

Surprisingly, the index’s exports component reached 54.3, a high mark not seen in the last five years. Gardner Business Intelligence will be watching currency markets very closely in 2017 for a multitude of reasons including the progression of Brexit, America’s changing stance on free-trade and trade agreements, and the government’s efforts to make markets fairer for American companies. Any and all of these political factors could generate unexpected shocks to currencies, and thus import and export dynamics and volumes.

Material prices and prices received indicate that input cost increases are being felt broadly and that composite products manufacturers have yet to pass these costs onto their customers to the same degree. A comparison of these components using a 12/12 ROC reveals that material prices have increased by more than 27 percent, while prices received have increased by only 10 percent. Given the size of this gap, the index may be signaling that moldmaking equipment prices may rise in the future as the costs of materials are passed downstream.

Our view of the future for the moldmaking industry is bright. A recent study by the Congressional Budget Office indicated that between 20 and 40 percent of future GDP growth in the U.S. will come from workforce growth, with the remaining 60 to 80 percent coming from productivity growth. This productivity growth will result from better, smarter, and more capable machines; computers; and other tools that enhance the abilities and productivity of workers. As increasing wages and a limited labor supply begin to make themselves felt in the economy, mold makers should consider working closely with their equipment manufacturers to find ways to meet their growth objectives. Now is truly an important time for mold equipment consumers to be collaborating with their suppliers to utilize the latest equipment and power future growth.