After an extraordinarily strong burst of activity over the last 12 to 15 months, current North American business conditions declined for a second straight month in September, according to NEMA’s Electroindustry Business Confidence Index (EBCI). The EBCI is a monthly survey of electrical manufacturers conducted by the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.
The index posted its fifth consecutive monthly decline, falling 10.2 points to 36 points, below the 50-point threshold indicative of expansion. While the North America future conditions index also remained below 50 points, it rebounded to its highest level since June, rising nearly nine points from a month ago to 26 points. The September EBCI indicators for each of the other three world regions included in the survey pointed to current and continued growth.
NEMA said the recent deterioration of the North American index should be viewed in the context of the solid economic conditions its members have enjoyed recently. Robust demand for electrical equipment in the manufacturing and construction sectors and the added stimulus of Gulf Coast relief led to rates of capacity utilization in the factories of U.S. electrical equipment manufacturers of close to 94 percent by late summer 2006, the highest in more than 30 years.
U.S. shipments of electrical equipment averaged nearly 12 percent growth during the 12-month period ended in July. NEMA was not surprised such dramatic growth would eventually wane, or that its members are cautious about the future. “Business activity has softened,” said one manufacturer. “Incoming order rates are off 15 percent to 20 percent compared to the first half of the year.”
However, several respondents hadn’t seen such a dramatic slowdown. “Demand continues to be substantial,” said one NEMA member. “There’s only a few signals indicating a measurable slowdown. I expect to see slowing in this calendar year.” Added another manufacturer, “We are watching for the clear sign of decline, and it keeps fooling us with steady performance.”