EBCI Tops 50 For 24th Consecutive Month

May 13, 2005
Electrical manufacturers contributing to NEMA’s Electroindustry Business Confidence Index are feeling pretty darn optimistic about both current and future business conditions across all four regions included in the monthly survey.

Electrical manufacturers contributing to NEMA’s Electroindustry Business Confidence Index are feeling pretty darn optimistic about both current and future business conditions across all four regions included in the monthly survey. Not only did current sentiment for North America, at 55.2 points in April, measure greater than 50 for the 24th consecutive month, current conditions indices in all regional markets topped 50 for the fourth month in a row. A reading of above 50 in the EBCI, a monthly survey of senior executives at member firms of the National Electrical Manufacturers Association (NEMA), Rosslyn, Va., indicates conditions are favorable for growth.

The regional EBCI index readings suggestive of continued, if restrained expansion and cautious optimism. Said one manufacturer, “Business is beginning to pick up. However, I would not describe economic activity as dynamic.”

The primary concerns of the panelists revolved around cost pressures and the related issue of the Federal Reserve’s policy stance. The comments underscore the difficult balance between excessive inflation accommodation and the potential of tight monetary restraints from the Federal Reserve. Several respondents appear concerned that the balance may be tipping in the direction of the latter.

Comments on conditions six months from now were dominated by apprehension about the near-term course of energy and commodity prices and interest rates and their effect on the broader economy. With all four of the EBCI’s future conditions indices pointing toward industry growth through at least early autumn, optimism clearly remains the order of the day. Said one NEMA manufacturer, “There seems to be an underlying strength in the current business climate that has not been evident since the onslaught of the recession.”

While the tone of comments from respondents overall was optimistic, at least one executive was watching several economic factors very closely. “We are concerned about oil, inflation, interest rates, and their impact on housing starts.”