Global business conditions in the electrical market enjoyed a sharp spike in January, according to the Electrical Business Confidence Index (EBCI), a monthly survey of senior executives at member firms of the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.
For the first time since October 2004, the EBCI indexes measuring current conditions in North America, Latin America, Europe and Asia/Pacific surpassed the growth threshold of 50 points. A reading above 50 indicates conditions are favorable for growth.
In January, Latin America and Europe expanded from their December readings, while North America and Asia/Pacific remained flat. Broadening by nearly 10 points, the Europe index demonstrated the greatest improvement with 56.7 this month, and Latin America improved by nearly four points to 63.8. The breadth of confidence in North America business conditions increased by less than one point to 62.9 while the Asia/Pacific number narrowed by an insignificant 0.2 points to 55.6.
Raw material costs remained the most frequently mentioned factor affecting business conditions for the industry. EBCI respondents noted that costs are still high and manufacturers continue to have to absorb much of those additional costs. One respondent said price hikes had moderated. “At least commodities have not gone substantially higher,” he said. “The price increases on related products still do not offset the increases received on copper and steel.”
Comments regarding future conditions reflected a mixture of strengths and risks ahead. Said one NEMA manufacturer, “Almost all indications and forecasts project continued improvement in 2005. However continued high material costs and fragile confidence on the part of corporations and individuals could inhibit growth this year.”
Said another survey respondent, “Higher interest rates will slow residential construction; this should be offset by continued gradual improvement in commercial and industrial activity.”