Overall Activity Levels in Positive Territory

Business conditions for North American moldmakers ended 2005 on a positive note, as a welcome gain in New Orders pushed overall activity levels into positive territory in December. Based on the latest survey for our Mold Business Index (MBI), the MBI value for December is 52.3. This is a 3.8 percentage point increase from the November value of 48.5. Solid increases also were posted in the Employment and Future Expectations components. For 2005 as a whole, the total MBI registered an increase in 10 of the 12 months. And moldmakers should take heart in the fact that as we enter 2006, the trend in the overall data remains on an upward trajectory.

The latest sub-index for New Orders of molds is 60.3, which means that the amount of new business in December was significantly higher than in the previous month. Production activity was steady in December, as the latest Production sub-index is exactly 50.0. The Employment component is 60.3, which indicates that the total number of workers in the industry increased again during the past month. The industry’s overall backlog was mostly steady, as the Backlog sub-index is 46.6.

The Future Expectations sub-index at 75.9 for December indicates that moldmakers are increasingly optimistic about business conditions in the coming year. However, there was very little change in their reported capital investment plans for the future. The prices paid for resins and steel remain high, but they are not rising as rapidly as they have in previous months. The latest sub-index for Materials Prices is 67.2. Supplier Delivery Times are beginning to stabilize, with this sub-index posting a value of 46.6 in December.

Our forecast continues to call for rising activity in the plastics manufacturing and tooling industries through the end of 2006. Plastics processors remain in a cyclical upturn in spending on new capital equipment and tooling. The major plastics indicators show that manufacturing levels and utilization rates in the U.S. increased in recent weeks, and the U.S. economy’s crucial leading indicators are still in a sustainable growth phase. The biggest threat to this forecast for 2006 is the high price of petroleum and other energy products. But barring a major supply disruption, we will stick with our forecast for energy and materials costs to continue gradually downward in the coming months.

December 2005
	% Positive	% Equal	% Negative	Net % Difference	Sub-Index
New Orders	48	24	28	20	60.3
Production	24	52	24	0	50.0
Employment	24	73	3	21	60.3
Backlog	28	37	35	-7	46.6
Export Orders	3	94	3	0	50.0
Supplier Deliveries	3	87	10	-7	46.6
Materials Prices	35	65	0	35	67.2
Mold Prices	10	76	14	-4	48.3
Future Expectations	59	34	7	52	75.9
Total Mold Business Index for December 2005: 52.3. The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.