EBCI Index Gains Ground In October

The Electroindustry Business Confidence Index (EBCI) for current North American conditions rebounded in October following five consecutive monthly declines. At 44 points, the index again fell short of the 50-point threshold indicative of expansion, but the latest results suggest the rate of deterioration in business conditions slowed appreciably during October relative to the prior month. The EBCI is a monthly survey of electrical manufacturers conducted by the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.

Current conditions for each of the other three world regions included in the survey all declined in October but remained well above the critical 50-point mark.

Panelists are still concerned about building material costs, weakness in telecommunications and utilities markets and the sharp slowdown in residential construction. At the same time, they said nonresidential construction is strong and that the manufacturing sector is largely in good shape. The health of these key pillars of the electrical industry has led to continued high levels of output and shipments of electrical equipment in recent months, even in the face of a significant retrenchment in homebuilding.

Because other markets sectors are so healthy, EBCI respondents did not seem to think the slowdown in residential construction would have as much impact on overall industry sales. Said one respondent, “There are strong cross currents right now. Residential construction is declining, but many nonresidential categories are strengthening.”

At least two manufacturers were looking forward to another solid business year. “Business has been so good this year it’s hard to imagine it could be much better,” said one respondent. “We are forecasting modest improvement next year, but the rate of change will be down.” Said another manufacturer, “Our 2007 outlook shows some improvement over 2006. With commodity costs moderating and energy costs sinking, manufacturing cost pressures are receding.”