Electrical manufacturers see an expanding electrical market down the road but seem to be struggling to get over a short-term bump in economic conditions at year-end, according to the Electroindustry Business Confidence Index (EBCI), a monthly survey of members of the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.
The EBCI indicator for current North American business conditions declined for the second month in a row in December, dropping to 30 points from 39.6 in November, and trailed the 50-point threshold indicative of industry expansion for a fifth straight month. However, the EBCI for future North American conditions, a measure of executives’ expectations for conditions six months ahead, climbed nearly 15 points in December to 48 points. Though still slightly below the critical 50-point barrier, December’s reading was the highest since April.
NEMA believes the continuing deterioration of the residential construction sector and the impact of a typical holiday season’s slowdown in activity are responsible for December’s slide in North American business conditions. One EBCI panelist said the December lull was “a typical end-of-year slowdown in incoming orders, with distributors pushing off deliveries until the new year and no major decision-making going on.”
While the housing market is unlikely expand much in 2007, the other key end-markets of the electrical market — nonresidential construction, manufacturing and utilities — are expected to see further growth in 2007.
Conditions were solid in global markets. Each of the six EBCIs for other world regions reached or exceeded the 50-point growth threshold in December. Both current and future conditions readings for Latin America posted solid gains, rising more than 15 points to 57.7 points and almost 8 points to 65.4 points, respectively. Both European indicators showed modest growth. The EBCI index for current conditions in the Asia/Pacific region was stable, and the EBCI index measuring future sentiment in the region was up 14.3 points to 64.3 points.