NEMA Index Shows Increasing Confidence

The November 2003 NEMA Electroindustry Business Confidence Index (EBCI) reflected optimism in current market conditions, although some respondents were still uncertain about future business conditions.

For the first time since the inception of the EBCI, published monthly by the National Electrical Manufacturers Association (NEMA), Rosslyn, Va., the current conditions indexes for all four global regions have exceeded the growth threshold of 50 index points.

Confidence in business conditions in Europe, which had not been above 50 since April 2001, finally vaulted past the growth threshold with an index value of 56 in November. Index scores in North America and Latin America reflected a greater breadth of confidence compared to last month, and the index for Asia/Pacific held steady at 75 points. With the exception of Europe, the November numbers are record highs for all regions. Said one respondent, “There seems to be a year-end flurry of activity to buy in the 2003 budget year. This wasn’t evident last year.”

“Overall business conditions are improving,” said another NEMA manufacturer. “The trade is finally beginning to increase inventories, and even nonresidential is beginning to stir in some parts of the country.”

The future conditions indexes for all four regions also registered above 50 for November. Notably, the North America and Asia/Pacific future conditions index values matched their respective current conditions index values. Although the index values increased for three of the four regions in November, most of the comments were tinged with caution.

Even those respondents optimistic about future business conditions seemed to be expecting relatively modest improvement.

“Conditions six months on down the road will be better, but not (what) we all would like to see. There is some danger that the impetus from the tax cut will die out, but I believe that the stimulus has been sufficiently large to become self-sustaining by mid-2004.”