EBCI Global Outlook Strong In February

March 11, 2005
For the second month in a row, current conditions in the global electrical market remained favorable, according to the Electrical Business Confidence Index (EBCI), a monthly survey of senior executives at member firms of the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.

For the second month in a row, current conditions in the global electrical market remained favorable, according to the Electrical Business Confidence Index (EBCI), a monthly survey of senior executives at member firms of the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.

All four regions measured by the EBCI survey exceeded 50 points. A reading above 50 indicates conditions are favorable for growth. Although the North America index dropped to 55.6 after topping 60 in each of the three months from November 2004 to January 2005, February marked the 22nd straight month that the index indicated a growing market.

The Latin America index was also off somewhat in February, slipping to 56.7 from last month’s reading of 63.9. Meanwhile, confidence in current conditions in both Europe and the Asia/Pacific region gained ground.

Optimism for future conditions across all regions continued to prevail in February. North America led the way with a 78.6 reading, the fourth consecutive month that figure has reached the high-70s. EBCI respondents said some weakening in expectations may be attributable to the recent period of sustained growth. Said one NEMA executive, “Demand remains strong, but it’s not strengthening further.”

Rising interest rates are a concern. One respondent said, “The Fed is wrong to be tightening from here. If they continue to raise rates, they will not only stall the recovery, they may very well push us into another slowdown. Their hyper-fear of serious inflation is unfounded.”

Another respondent said the outlook for the electrical industry in 2005 depends on the “long-predicted recovery in nonresidential construction.” “If we do, then it will be a bang-up year. If not, it will be a mediocre one,” he said.

Another respondent had a fairly optimistic outlook. “Electrical distribution continues to shop every job,” he said. “Demand is definitely increasing in commercial and industrial (markets), and residential construction remains at historical highs.”