EBCI Shows Less Concern About 2006

Jan. 6, 2006
NEMA’s Electroindustry Business Confidence Index (EBCI) for current conditions in North America fell for a third straight month in December, slipping to 58.3 points from 65.4 in November.

NEMA’s Electroindustry Business Confidence Index (EBCI) for current conditions in North America fell for a third straight month in December, slipping to 58.3 points from 65.4 in November. The EBCI, a monthly survey of senior executives at member firms of the National Electrical Manufacturers Association (NEMA), Rosslyn, Va., had reached a 17-month high of 83.3 in the immediate aftermath of Hurricane Katrina in September.

While current economic conditions slipped from November, the EBCI index for North American market conditions six months from now rose back above the 50-point growth threshold to 56.3 points, after slipping to 48.1 in November.

The EBCI for current North American conditions continued to signal growth, and respondents’ comments showed much less of the uneasiness seen as recently as a month ago.

The gradual slide in the North American current conditions index appears consistent with NEMA manufacturers’ comments in December. The comments reflected a traditional seasonal slowdown as well as a natural moderation from post-Katrina highs. One manufacturer comment in particular seems to capture the current climate: “After three fantastic months, December seems to be returning to normal.

Sentiment regarding North American conditions over the next six months rebounded in December, having slipped below the 50-point mark indicative of electroindustry expansion for the first time in the previous month.

Manufacturers cited the utility market, several nonresidential construction sectors and a buoyant Chinese economy as potential positives. At the same time, panelists raised several risks to the ongoing health of the industry and the economy as a whole: concern about the depth of a likely housing market correction, material and consumer inflation, and Federal Reserve Policy.

Current sentiment and future expectations were positive in the other three world regions included in the survey for the third month in a row. Both the Latin America and Asia/Pacific indexes, both current and future, saw gains in December, as did the current conditions index for Europe. Only the reading for future European conditions was down in December, sliding to 68.2 points from 73.1 a month ago.