NEMA’s EBCI Slips For July

Aug. 6, 2004
The electrical industry has hit “a flat spot in the road rather than a downhill stretch,” according to at least one respondent to a monthly survey of National Electrical Manufacturers Association (NEMA) members.

The electrical industry has hit “a flat spot in the road rather than a downhill stretch,” according to at least one respondent to a monthly survey of National Electrical Manufacturers Association (NEMA) members.

According to the July 2004 Electroindustry Business Confidence Index (EBCI) published by NEMA, Rosslyn, Va., respondents see some evidence of a recovery that is still uneven across segments of the electrical industry.

In the EBCI July report, all four current conditions indexes remained above 50 (the threshold indicating conditions are favorable for growth), suggesting growth in the electrical industry. Compared to June’s results, Europe expanded while North America, Latin America and Asia/Pacific contracted.

The biggest change in the indexes was an eight-point decline to 60.4 in North America. The Europe index expanded by nearly the same margin to 68.2. Although the current conditions indexes for both Latin America and Asia/Pacific narrowed, the change in each was relatively slight with the Latin America index softening from 63.3 to 61.5 and Asia/Pacific easing back from 62.5 to 61.5 points in July.

Looking ahead six months, all of the future conditions indexes also stayed above 50 in July’s survey, all four remaining above the growth threshold. The Latin America index was essentially flat as it drifted from 73.3 in June to 73.1 points this month. Meanwhile, Asia/Pacific was absolutely flat, and stayed steady at 64.3 points. Although the North America future conditions index contracted, it did so by only 4 points to 75 — still the broadest level of confidence among the regional indexes. By contrast, Europe’s future index receded 16 points to 59.1, signaling a significant erosion of confidence in conditions there by year’s end.

“Business is up, but indicators are softer than we would like to see for the second half of the year,” said one electrical manufacturer.

“Mid-way through the summer we seem to have hit a ‘soft spot’ as July orders have slowed from the June pace — not a normal seasonal event,” added another respondent. “Many of the national statistics from GDP on down have shown a weakening in the second quarter, so maybe this is a reflection of that decline.”

Some NEMA respondents believe conditions for the next six months will revolve around the U.S. presidential election. They mentioned concerns ranging from potential disruptions, market anticipation and response to the election and a general slowing once the pressure of election-year politics is off. Despite politics and its potential effect on the marketplace, some respondents remained upbeat about their end markets.

According to one comment, nonresidential construction appears set to improve even as housing eases from an unprecedented high level. Finally,one panel member expects certain sectors of the Mexican economy to pick up in the next six months.