U.S. electrical manufacturers are cautiously optimistic about current business conditions in the electrical market, according to the Electrical Business Confidence Index (EBCI), a monthly survey of senior executives at member firms of the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.
Confidence in current business conditions expanded modestly in December in all four regions, with the Asia/Pacific index's nearly six-point improvement to 55.8 marking the greatest change from November. A reading above 50 indicates conditions are favorable for growth.
Already bullish expectations for future business conditions in North America and Asia/Pacific became more so by approximately 2.5 points as the indexes reached 79.3 and 62.5 points, respectively, in December.
Although some respondents were still concerned about high materials prices, the frequency and intensity of concern about commodity costs appears to have receded rather substantially. One comment pointed toward manufacturers' resiliency in the face of continued high metals prices. “Business is strong and steady, but we still don't see or feel the drivers for meaningful market growth from here,” said one executive. “Commodity prices are an on-going challenge on the cost side.”
Several NEMA members said business at year-end fell off slightly because of a general seasonal slowdown and a year-end push from distributors to reduce inventories. Regarding future market conditions, some respondents were quite optimistic, while others see potential trouble in material cost inflation and the effect rising interest rates will have on construction activity. Said one respondent, “Business conditions in six months are linked to continued low interest rates and robust residential construction, steadying raw materials costs and improving commercial construction activity.”
Another respondent expected business in North America to improve, “assuming no escalation of terrorist activity or political disruption.”