Current global conditions in the electrical market remain good, according to the Electrical Business Confidence Index (EBCI). The EBCI, a monthly survey of senior executives at member firms of the National Electrical Manufacturers Association (NEMA), Rosslyn, Va., topped 50 points for the third consecutive month in March. A reading above 50 points indicates conditions are favorable for growth.
The North America index climbed nearly five points to 60.4, following a dip in February. This marked the 23rd consecutive month the North American index had a value of 50 or higher. Confidence in current conditions in both Europe and the Asia/Pacific region lost ground in March. The Europe index fell nearly four points to 54.5 points, while the Asia/Pacific index slid nearly seven points to 63.3 points.
Expectations for future conditions remained relatively optimistic. Of the four regional indexes, only Europe failed to reach 50 points, falling significantly to 45.8 points. Meanwhile, expectations for conditions in six months in both North America and the Asia/Pacific region lost some ground in March. The North America index slipped 6.6 points to a still robust 72 points, while the Asia/Pacific index was off nearly eight points at 60 points.
EBCI respondents remain most concerned about rising raw materials and energy costs, as well as potential hikes in interest rates. Said one EBCI respondent, “$50 oil will definitely reduce GDP growth around the world.” However, respondents’ expectations were generally quite good. One EBCI panelist expects 2005 to be a “break-out year.” “I think 2005 will be a very good year,” he said. “It has the potential for being a “break-out” year like 1994. That being said, the run-up in the prices of oil, copper, and other raw materials continue to be worrisome.
Another executive saw marked improvements over the past two to three months in quotations, especially in quotes for industrial and OEM equipment. “Both NEMA and the Census Bureau report strong improvement in orders for electrical equipment, and it would appear that channel inventories are at very lean levels,” he said.