NEMA’s Electroindustry Business Confidence Index (EBCI) for current North American conditions stood at 55.8 points in May. While representing a decline from readings in the high 60s posted in recent months, May’s result was still strong. The EBCI index has now topped the 50-point growth threshold for 37 consecutive months. The EBCI is a monthly survey of electrical manufacturers conducted by the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.
NEMA members continued to view current business conditions as highly favorable in May, but their evaluation of near-term growth prospects has deteriorated dramatically over the last two months.
Although the breadth and intensity of positive sentiment regarding the current North American market decelerated slightly in comparison to April, NEMA said the comments of many respondents showed an exuberance rarely seen in the history of the EBCI survey. Several manufacturers said May orders were running 15 percent to 20 percent ahead of April.
However, survey respondents were not as bullish about future market conditions. The EBCI for future North American conditions fell sharply to 26.9, reflecting the now widespread view that business conditions at year-end will be weaker to at least some degree. As recently as March, the EBCI for future North American conditions measured in the high 50s.
Said one NEMA member, “The first four to five months of the year have been so good that it’s hard to believe the last seven-to-eight months could be equally as robust. Higher interest rates are beginning to bite and metals prices (especially copper) are going nuts!”
Said another respondent, “Astronomically high metal prices and high commodity prices are creating some speculative behavior that will not be sustained. These high prices must find an outlet in inflation sooner or later.”
Another manufacturer was concerned with rising interest rates, rising fuel costs, rising raw material costs and the impact these factors will have on capital spending and construction projects.