Stabilized Business Activity

Activity levels for North American moldmakers could certainly be better than they are at the present time, but things appear to have stabilized in recent months. Based on the latest survey for our Mold Business Index (MBI), the MBI value for November was 50.3. This is a 0.3 percentage point increase from the October value of 50.0. All of the components that comprise the MBI were mostly steady when compared with the previous month. Future Expectations elevated sharply to 76.8 in November.

As 2006 came to an end, the U.S. manufacturing sector was struggling with the problems of the Big 3 auto makers, the decline in residential construction levels and concerns about the war in Iraq. But the overall U.S. economy continued to expand at a moderate pace, and our forecast calls for improvement in moldmaking activity as this year progresses. Global demand for molded products is expanding in the long-run and materials prices have declined. These factors will promote increased capital investment for new injection molding machines and tooling in 2007.

The crucial sub-index for New Orders of molds was 55.4 in November, which means that the amount of new business increased moderately when compared with the previous month. Future gains in the total MBI depend on steady increases in new orders of molds. Production levels also were better, as the latest Production sub-index was 51.8. The Employment component was 48.2, which indicates that overall payrolls were flat-to-down in recent weeks. The industry’s overall backlog was also flat-to-down, as the Backlog sub-index registered 48.2 in November.

The Mold Prices sub-index for the latest month was 46.4. This means that the prices received for new molds were a bit lower on average last month. The prices paid for materials increased again, as the latest sub-index for Materials Prices was 60.7.

After a flat year in 2006, our Injection Molding Business Index (a measure of production levels for injection molders) will post a solid gain of 5 percent in 2007. Consistent gains in the Mold Business Index depend on sustained growth of 4 to 5 percent in the output of injection molded products. Output of these products slowed in the second half of 2006, but this trend will be reversed in the near future. The trend in the moldmaking industry lags the trend in the processing sector by about six months.

November 2006
	% Positive	% Equal	% Negative	Net % Difference	Sub- Index
New Orders	32	47	21	11	55.4
Production	18	68	14	4	51.8
Employment	11	75	14	-3	48.2
Backlog	25	46	29	-4	48.2
Export Orders	0	96	4	0	48.2
Supplier Deliveries	7	86	7	0	50.0
Materials Prices	21	79	0	21	60.7
Mold Prices	11	71	18	-7	46.4
Future Expectations	61	32	7	51	76.8
Total Mold Business Index for November 2006: 50.3. The total Mold Business Index is a weighted average of the sub-indices for new orders, production, employees, backlog, exports and supplier deliveries.