As electrical manufacturers contended with ongoing supply chain difficulties and rapidly rising inflation, Russia launched the most significant armed conflict on the European continent since WWII. Although mounting challenges facing the industry no doubt contributed to a softening of the current conditions component, which slid from 66.7 points in February to 50 points this month, continued strong demand arguably prevented the reading from sliding into contraction territory.
One respondent summed up the situation by noting “concern over Ukraine, but current order rates are strong with the same challenges from a supply chain/inflation standpoint.”
The ElectroIndustry Business Conditions Index (EBCI) is a monthly survey of senior executives at electrical manufacturers published by the National Electrical Manufacturers Association (NEMA), Rosslyn, VA. Any score over the 50-point level indicates a greater number of panelists see conditions improving than see them deteriorating.
For the first time since early in the pandemic, the future conditions component dropped out of expansion territory with half of the respondents expecting “worse” conditions in six months. The EBCI for Future Conditions pulled back from February’s 54.2 points, registering 32.1 points this month, the lowest reading since the summer of 2019.
Comments were mixed regarding the expected environment related to supply chain, inflation, and Russia/Ukraine but on net exposed an uncomfortable level of uncertainty ahead. Added to that mix of market stressors, one panel member suggested the likelihood that current demand is artificially inflated and will soften as market impediments unwind.
