Index Registers Decline for Electrical Business in September

By Consulting Specifying Engineer Staff October 17, 2006

On the heels of a strong burst of activity over the last 12 to 15 months, current North American business conditions declined for a second straight month in September, according to NEMA’s Electroindustry Business Confidence Index (EBCI). The index posted its fifth consecutive monthly decline, falling 10.2 points to a level of 36, below the 50-point threshold indicative of sectoral expansion.

While the North American future conditions index also remained below 50, it rebounded to its highest level since June, rising nearly 9 points from a month ago to 26. September EBCI indicators for each of the other three world regions included in the survey pointed to both current and continued growth.

The recent deterioration of the North American index should be viewed in the context of a heretofore booming electroindustry.Robust end-markets for electrical equipment such as manufacturing and construction, as well as the added stimulus of Gulf Coast relief and precautionary buying in the face of a projected heavy hurricane season in late 2005 and the first half of 2006, led to rates of capacity utilization in the U.S. electrical equipment manufacturing sector of close to 94% by late summer 2006, the highest in more than 30 years.U.S. shipments of electrical equipment averaged nearly 12% growth during the 12-month period that ended in July. According to the NEMA report, “It is not surprising such dramatic growth would eventually wane and that the EBCI would reflect a more cautious assessment of business conditions by NEMA-member executives.”

For a complete summary of the September 2006 index, including charts and a list of participating companies, click here .