Solid Improvement in Moldmaking Activity Levels

Activity levels for North American moldmakers showed solid improvement in the past month, but supply-related issues (materials prices and supplier delivery times) are still an issue. The MBI value for June is 56.5, which represents a strong 6.1 percentage point increase from May's 50.4. The New Orders, Production, Employment and Backlog sub-indices all advanced, but there was another reported rise in Materials Prices and Supplier Delivery Times continued to lengthen. The Future Expectations sub-index escalated to a value of 79.0.

New Orders of molds is 62.9—higher than in May, showing the continued gradual rise in this category. Production activity in June also increased with its latest sub-index of 61.3. Employment is 61.3, indicating another increase in the total number of workers. Total backlog was longer with a sub-index of 58.1. The number of offshore orders for new molds was unchanged last month, and Export Orders is exactly 50.0. The Mold Prices sub-index is a heartening 59.7—meaning that prices for new molds increased significantly, but at the same time, the prices paid for materials continued to rise, as the latest sub-index for Materials Prices came in at 74.2. Supplier Delivery Times lengthened, with this sub-index posting a value of 45.2. The Future Expectations sub-index indicates that moldmakers are even more optimistic than they were the previous month (a value of 79.0), which is matched by a noticeable increase in the aggregate capital investment plans for the future.

Our forecast calls for gradually rising activity in the plastics manufacturing and tooling industries throughout most of the remainder of 2005. This will result in a gradual, but steady gain in the MBI data. Plastics processors are still in a cyclical upturn in spending on new capital equipment. This combined with the continued rise in overall spending on industrial equipment in the U.S. indicates that the demand for new molds will remain in a gradual uptrend for the foreseeable future. Most of the major economic indicators suggest that plastics manufacturing levels in the U.S. increased modestly in recent weeks, and the U.S. economy's crucial leading indicators are still in a sustainable growth phase. This means that our Injection Molding Business Index should continue to expand during the next few quarters. Following a gain of 4 percent in 2004, this Index is forecast to increase another 4 percent in 2005. Consistent gains in the MBI depend on sustained growth of 4 to 5 percent in the output of injection molded products. The trend in the moldmaking industry also lags the trend in the processing sector by about six months. So as demand for molded products expands in the coming months, orders for new molds will continue to rise.

June 2005
	% Positive	% Equal	% Negative	Net % Difference	Sub-Index
New Orders Production Employment Backlog Export Orders Supplier Deliveries Materials Prices Mold Prices Future Expectations	45 36 29 39 3 0 48 26 65	36 51 64 38 94 90 52 67 28	19 13 7 23 3 10 0 7 7	26 23 22 16 0 -10 48 19 58	62.9 61.3 61.3 58.1 50.0 45.2 74.2 59.7 79.0
Total Mold Business Index for June 2005: 56.5. The total Mold business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries. The MBI is based on a monthly survey from which a diffusion index is calculated based on 50.0. A value above 50.0 indicates that business activity expanded, while a value below 50.0 means that business levels declined.