Motors shipments slip in third quarter of 2007

The National Electrical Manufacturers Assn.’s motors shipments index The recent drop in fractional and integral horsepower motors demand came despite an uptick in broader macroeconomic growth. Indeed, real GDP increased by an average annual rate of 3.9% during the third quarter of 2007, up slightly up from the 3.8% annualized gain during the April to June period.The primary concern with respect to the economy as a whole remains the housing market. Virtually all indicators point to a deepening of the housing market’s problems, which include falling prices, rising foreclosure rates, and declining construction activity, over the course of the next several months. This will likely continue well into the second half of 2008 as the subprime mortgage crisis continues to unfold. The industrial sector remains in better shape, thanks to solid growth in output and business capital spending; however, confidence levels have slipped among manufacturers due to looming uncertainty over the economy’s trajectory and ebbing corporate profits.Going forward, shipments of integral horsepower motors are expected to increase thanks to steady replacement and business investment demand. While that will buoy the overall total, the fractional horsepower segment is expected to weigh on the index over the next several quarters as crucial domestic end-markets will likely see conditions worsen. Consequently, NEMA/BIS anticipates the motors shipments index will post modest declines over the near term.The NEMA motors shipment index is a composite measure of NEMA-member companies’ U.S. shipments of fractional and integral horsepower motors. Product shipments data are drawn from NEMA statistical surveys and are adjusted for inflation and seasonal fluctuations.

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