Confidence in current business conditions affecting the electrical industry eroded some in August, with concerns about the cost of oil, steel and other commodities causing electrical manufacturers uneasiness, according to a monthly survey of National Electrical Manufacturers Association (NEMA) members.
According to the August 2004 Electroindustry Business Confidence Index (EBCI), published by NEMA, Rosslyn, Va., some respondents reported strong current conditions affecting their segment of the electrical industry. But many others took a more measured stance, waiting for the recovery to pick up steam in general, and continuing to anticipate improvement in the utility and commercial and industrial markets, or looking for relief through legislative action regarding energy policy.
“The recent downturn in the stock market coupled with the lack of jobs creation and the high cost of oil plus the upcoming presidential election has created some doubt on the sustainability of current spending in our market space (utility),” said one electrical manufacturer. “If interest rates continue upward, some dampening in spending will take place.
“Business is better, but not robust,” added another electrical manufacturer. “I have serious concerns about steel price escalation.”
The North America index continued its string of weaker numbers for the fourth consecutive month as it receded by five points to 56.9 in August. The current indexes for both Europe and Asia/Pacific reached 50 points, the dividing line between expansion and contraction in the electrical manufacturing sector.
Respondents to the future conditions index appeared hopeful about the economy in six months, citing the resolution of the U.S. presidential elections, a resolution in the Federal Reserve's interest rate strategy, and a recovery in the nonresidential construction markets.
One other respondent wasn't as bullish. “The Federal Reserve Bank better slow down the pace of interest rate increases or this fragile recovery will stall,” he said.