NEMA’s Electroindustry Business Confidence Index (EBCI) for current North American conditions posted a sharp increase in February, climbing to 68.5 points from 55.2 points in January.
February’s reading for the EBCI, a monthly survey of electrical manufacturers conducted by the National Electrical Manufacturers Association (NEMA), Rosslyn, Va., was the strongest since last September and the 34th in a row above the critical 50-point threshold indicative of favorable business conditions. At the same time, the February EBCI for future North American conditions slipped slightly to 53.6 points, down from 56.9 a month ago.
Current sentiment and future expectations for the other three world regions included in the EBCI survey remained firmly in positive territory for the fifth month in a row. Both current and future conditions indexes for Latin America saw healthy rebounds from sharp drops in January. Meanwhile, readings for both Europe and the Asia/Pacific retreated.
The strength of the electrical industry in February surprised a number of panelists. One electrical manufacturer said business was “extremely strong” in all markets and that his overall business was up 25 percent, while another panelist said, “We are expecting the strongest two-month start ever.
One EBCI respondent said electrical distributors were being more cautious about inventory levels because pricing for commodities such as copper, steel and resins had softened, but overall, NEMA respondents seemed delighted with current business conditions.
The optimism apparent in the NEMA manufacturers’ evaluation of current market conditions continued in their forecasts for future business, although some respondents were concerned about how the slowdown in the housing market could affect the U.S. economy, commodity pricing and the potential of higher interest rates. Said one panelist, “It will be interesting to watch Federal Reserve Bank actions under new leadership. Over-tightening still feels like a real risk for 2006.”