NEMA’s EBCI Index Still Solid In July

Aug. 5, 2005
North American business conditions strengthened in July, according to NEMA’s Electroindustry Business Confidence Index (EBCI).

North American business conditions strengthened in July, according to NEMA’s Electroindustry Business Confidence Index (EBCI). The EBCI is a monthly survey of senior executives at member firms of the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.

Current conditions registered 62.9 points, bouncing back from the previous month’s reading of 54.7 points. An EBCI reading of above 50 indicates conditions are favorable for growth.

While July’s increase was certainly encouraging, the EBCI continues to fluctuate within a relatively tight band. Values have ranged from the mid-50s to the low 60s over the last 13 months. This sustained period of favorable conditions is expected to continue, according to electrical industry leaders, as the future conditions index for North America also gained ground in July. The index inched up to 62.9 points itself, from June’s mark of 60.9.

Confidence in current and future conditions in both Latin America and the Asia/Pacific region again remained above the 50-point growth threshold. Although current conditions in Latin America dropped almost 8 points to 55.6, future expectations climbed almost 5 points to 72.2. The Asia/Pacific indices were off slightly from a month ago, at 58.8 and 63.9 points, respectively, for current and future conditions. Meanwhile current conditions in Europe slid to 30 points, their lowest level in 24 months, and future sentiment fared little better, down almost 7 points on the month to 37.5 points.

The sluggish nonresidential construction business is also causing some concern. Said one respondent, “Business does not seem to be as strong as in recent months. It does not appear that commercial/industrial business is strengthening at the rate anticipated. Housing continues to be strong, but that makes less sense each month.” Several other respondents were more optimistic. “Quotations and orders continue to show improvement, especially in the building equipment categories,” said a respondent. “Industrial control business is just so-so.” Added another electrical manufacturer, “Business situation appears stable for now. It would be good to see more activity, but perhaps we should be grateful for what we have.”

At least one executive was concerned about business conditions six months from now. “Even though things are very strong currently, I still believe the Fed is over tightening and that conditions six months out are going to be negatively affected by this error in judgment.”