For the second consecutive month, the September NEMA Electroindustry Business Confidence Index (EBCI) for current conditions in the electrical industry remained above 50 (the threshold indicating conditions are favorable for growth) in all regions except Europe. Compared to August's index, the breadth of confidence in current business conditions increased in Latin America, but narrowed in the other three regions according to the survey, conducted monthly by the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.
The future conditions index values also showed no substantive change from August results, with all four regions reading above 50 index points. Even with this positive outlook for conditions six months from now, business conditions in Europe bear watching as this region was the only one to record a narrowing of the breadth of confidence when compared to the August results.
Respondents to the EBCI expressed concern about the continued weakness in some key markets, especially industrial and commercial sectors. Another concern of the respondents is the pressure on margins and pricing.
“Business is spotty,” said one manufacturer. “Some areas have improved slightly, such as electrical distribution. But other areas are still very difficult, such as industrial work and commercial datacom.”
Another manufacturer said he does not know if some recent improvement in sales will continue.
“We saw considerable improvement in June, July and August, following a weak second quarter. Now the question is will it last or will it flame-out as has happened a couple of times before?”
Several manufacturers expect utility construction to improve soon because of concerns over the recent blackout and the energy legislation now being discussed in Congress.
Said one manufacturer, “If Congress puts some teeth in the pending energy legislation relative to grid investments, I would expect to see our business grow next year. Something has to happen.”