“The drivers for new construction remain weak, and we don't anticipate significant recovery in this calendar year,” wrote one electrical-manufacturing manager who responded to the most recent monthly survey for NEMA's Electroindustry Business Confidence Index (EBCI).
The current-conditions index for North America dropped to 31 for March, its lowest level since January 2002. An index reading above 50 indicates expansion; below 50 indicates that the manufacturing economy is generally contracting. The index began the year with a reading of 55 and fell to 44 in February.
The decline mirrors the weakening in manufacturing industrial production and the fall in manufacturing capacity utilization. Given the uncertainty surrounding the outcome in Iraq at the time of the survey, rising energy costs, a weakening economy and unusually harsh weather in some regions, it's not surprising the index dropped.
Based on the results of a monthly survey of senior managers at member companies of the National Electrical Manufacturers Association (NEMA), Washington, D.C., the EBCI is designed to gauge the business confidence of the electroindustry in four key world regions: North America, Latin America, Europe and Asia/Pacific.
Since June 2002, confidence in current conditions affecting the electrical industry in the Asia/Pacific region has been higher than any other region — mainly because economic growth has been substantially higher in this region. But, since December 2003, confidence in this region has been eroding. The reading was 50 in March, the first time the index has fallen to that threshold since May 2002.