After hovering just above the breakeven 50-line for a couple of months, our MoldMaking Business Index slipped to 49.0 in April. This modest decline reflected a loss of momentum in the U.S. manufacturing sector and the overall U.S. economy. In terms of the pace of growth, the second quarter of 2013 will be the weakest quarter of the year for the U.S. GDP data. That means that the worst is now behind us. The economic data will continue to show the effects of lower government spending for another quarter or two, but these effects are diminishing with each passing month. Overall GDP growth will come in somewhere between 2% and 2.5% this year, but it will accelerate to at least 3.5% in 2014. The housing sector is finally able to lead the economy into a self-sustaining recovery, and this will be corroborated by steady improvement in the employment data. Lower energy prices resulting from an increased use of domestic natural gas resources will also spur accelerating economic growth by the middle of this decade.
Our latest survey of the North American moldmaking industry indicates that overall activity levels slipped a bit in April. The MoldMaking Business Index for April 2013 is 49.0 (a value less than 50.0 indicates a decrease in business levels for the month). The latest index value is a 2.2-point decrease from the March value of 51.2, and it is a 5.8-point decrease from the 54.8 value posted in April 2013.
Though our Index came in modestly weaker than the previous month, it should not yet raise many concerns. If the index begins a more rapid downward trajectory, it would indicate that manufacturers were aggressively cutting back on production and investment. But the index would need to stay below the 45-level for a few months for this to be a major concern. GDP growth this quarter will likely come in below 2%, but it will gradually accelerate in the second half of the year. This quarter, the economy is digesting the fiscal drag caused by lower government spending and stagnant income growth for households.
The New Orders component came in at 50.0 in the latest month, which means that the level of new business was unchanged when compared with the previous month. The Production sub-index of 52.7 indicates that work levels increased moderately when compared with the previous month. Anytime you have a month in which new orders are flat, but production levels increase the logical result is a decline in backlogs. This is exactly what happened in April as the Backlogs sub-index fell to 40.7 for the month. The Employment component is 51.7, which means that payrolls were higher for the fourth straight month, but the rate of expansion is decelerating.
The prices received in the moldmaking sector weakened a bit in April. The Prices Received sub-index for March is 49.0. The upward momentum in the sub-index for Materials Prices continued to decelerate in recent weeks, and the Materials Prices sub-index eased back 61.4. So materials prices continue to rise, but the rate of the gains are moderating. Supplier Delivery Times are starting to stabilize, as this component registered 52.4 in April. Offshore orders extended their downward trend last month. The Exports sub-index was 46.8.
The MoldMaking Business Index is based on a monthly survey of subscribers to Moldmaking Technology magazine. Using the data from this survey, Gardner Research calculates a diffusion index based on 50.0. A value above 50.0 for the index indicates that business activity expanded when compared with the previous month, and a value below 50.0 means that business levels declined.
Related Content
-
Mold Builder Uses Counter-Intuitive Approach for Mold Challenges
Matrix Tool Inc. answers customers’ hard questions with creative solutions for cavity spacing, tool sizing, runner layout and melt delivery that reveal the benefits of running in a smaller press size at lower cavitation but higher yield.
-
The Role of Social Media in Manufacturing
Charles Daniels CFO of Wepco Plastics shares insights on the role of social media in manufacturing, how to improve the “business” side of a small mold shop and continually developing culture.
-
Dynamic Tool Corporation – Creating the Team to Move Moldmaking Into the Future
For 40+ years, Dynamic Tool Corp. has offered precision tooling, emphasizing education, mentoring and innovation. The company is committed to excellence, integrity, safety and customer service, as well as inspiring growth and quality in manufacturing.
