It's safe to say that most distributors, manufacturers, reps and end users are disappointed with the pace of the U.S. economic recovery. The good news is we didn't fall into a double-dip recession and that while 2012 may be a year of slow growth for most electrical firms, it could be some very profitable growth. The recession forced businesses to do more with less, and business owners had no choice but to run their companies lean. As business picks up, companies may be able to pick up new orders at much higher margins than in the recent past.

The bad news is that it's hard to be overly optimistic about 2012's business prospects because of concerns about the budget debacle in Washington, D.C., Europe's economic mess, and a skittish stock market. The economic indicators in the following pages paint a picture of an economy slowly improving. Many of the data points with the most impact on the electrical market have bounced off the bottoms they experienced during the recession but are struggling to gain momentum, with the possible exception of the industrial market, which has weathered the economic storms better than the housing or nonresidential construction markets.

In last year's National Factbook, Electrical Wholesaling's editors pegged the industrial MRO and lighting retrofit markets as the best bets for growth. We haven't changed that evaluation in this year's edition. And we can't say that any big-time business opportunities have surfaced in the residential, commercial, institutional or utility markets, although pockets of growth are starting to pop up in the homebuilding markets, and some electrical companies will have some pretty major downtown redevelopment projects or data centers breaking ground in their backyards. Some truly massive utility-scale photovoltaic projects and wind farms are in full swing right now, but concerns about if the federal financial incentives that have fueled much of this growth will be cut in the budget discussion have clouded the growth prospects for some other solar and wind projects that had been on the drawing boards.

The data in this article will prove more valuable than the general economic forecasts you find in the business pages of most newspapers, because the papers focus more on retail sales, consumer spending and macroeconomic information rather than on data that directly affects the electrical market.

Copper Prices

Even industry veterans who have spent a lifetime selling wire and cable can’t really get a fix on which way copper is headed from year-to-year. It’s not likely to touch the historical range of 60 cents per pound to $1.30 per pound where it spent so much time before topping $3 per pound in 2006 and never looking back. In fact, the $3 level seems to have become the floor in the “new normal” for copper pricing. Other than a brief visit this past June, prices haven’t dipped below $3 per pound since 4Q 2009. Source: U.S. Geological Survey, MetalsWeek and www.metalprices.com

National Office Vacancy Rates

When looking at office vacancy rates, it’s all about the local numbers, because the data can change so much from the suburbs to downtown and even block-to-block in a city. McGraw-Hill Construction and Grubb & Ellis both say office vacancy rates have probably bottomed out, and McGraw-Hill expects the total contract value of new office construction to increase 5% next year to $17.35 billion. That definitely offers some reason for optimism, but it’s still a pretty bleak picture right now for office construction — 20 cities have downtown vacancy rates topping 20%. Source: Grubb & Ellis

Electric Utilities

Construction of new generating plants and updating existing infrastructure has been big news in the past few years, thanks to the development of solar power plants, wind farms and the smart grid. While these technologies are expected to grab the headlines again in 2012, McGraw-Hill expects utility construction to decline 24% in 2012 to 32 billion after registering gains of +34% and +48% in 2010 and 2011, respectively. The largest project expected to break ground next year is FPL’s $1.3 billion natural gas plant in Florida. Source: McGraw-Hill’s 2012 Construction Outlook

Purchasing Managers Index

As a measure of the appetite that industrial purchasing managers have for new products, the monthly Purchasing Managers Index is one of the most closely watched economic indicators in the manufacturing arena. It started strong in 2011 with several months scoring in the 60-point range — comfortably above the 50-point mark that indicates a healthy purchasing environment in the industrial market — but dropped about 10 points since April because of concerns about the slow U.S. economic recovery, the European economic mess and a double-digit recession. Source: Institute for Supply Management

Electrical Contractor Sales Potential

Metropolitan Statistical Area State
Rank Area Sales Potential Rank State Sales Potential
1 New York-Northern New Jersey-Long Island NY-NJ-PA 1,752,797,880 1 California 2,513,026,980
2 Chicago-Naperville-Joliet IL-IN-WI 1,020,472,320 2 Texas 2,468,039,640
3 Los Angeles-Long Beach-Santa Ana CA 787,563,180 3 New York 1,907,121,540
4 Houston-Sugar Land-Baytown, TX 758,520,720 4 Florida 1,583,668,260
5 Washington-Arlington-Alexandria DC-VA-MD-WV 739,728,540 5 Illinois 1,306,341,240
6 Dallas-Fort Worth-Arlington TX 577,432,440 6 Pennsylvania 1,182,768,420
7 Boston-Cambridge-Quincy MA-NH 462,970,980 7 Ohio 1,154,295,420
8 Miami-Fort Lauderdale-Miami Beach FL 460,123,680 8 Virginia 1,021,611,240
9 Atlanta-Sandy Springs-Marietta GA 437,914,740 9 Michigan 907,149,780
10 Detroit-Warren-Livonia MI 427,664,460 10 North Carolina 796,105,080
11 Seattle-Tacoma-Bellevue WA 407,163,900 11 Maryland 780,160,200
12 Denver-Aurora CO 396,913,620 12 Georgia 767,062,620
13 Baltimore-Towson MD 387,232,800 13 Washington 718,658,520
14 Philadelphia PA Metropolitan Division 382,677,120 14 Indiana 685,629,840
15 San Francisco-Oakland-Fremont CA 343,384,380 15 Colorado 667,407,120
16 Phoenix-Mesa-Scottsdale AZ 341,676,000 16 New Jersey 653,170,620
17 St. Louis MO-IL 318,897,600 17 Tennessee 615,016,800
18 San Diego-Carlsbad-San Marcos CA 312,064,080 18 Massachusetts 614,447,340
19 Seattle-Bellevue-Everett WA Metropolitan Division 293,841,360 19 Louisiana 575,154,600
20 Minneapolis-St. Paul-Bloomington MN-WI 276,188,100 20 Missouri 566,043,240
21 Nassau-Suffolk NY Metropolitan Division 271,062,960 21 Wisconsin 547,251,060
22 Pittsburgh PA 270,493,500 22 Minnesota 527,889,420
23 Santa Ana-Anaheim-Irvine CA Metropolitan Division 268,785,120 23 Arizona 481,763,160
24 Virginia Beach-Norfolk-Newport News VA-NC 267,076,740 24 Alabama 459,554,220
25 Warren-Troy-Farmington Hills MI Metropolitan Division 257,965,380 25 Kentucky 458,415,300
26 Cincinnati-Middletown OH-KY-IN 240,881,580 26 Iowa 387,802,260
27 Kansas City MO-KS 229,492,380 27 Oklahoma 379,260,360
28 Cleveland-Elyria-Mentor OH 224,367,240 28 South Carolina 353,634,660
29 Orlando-Kissimmee FL 212,978,040 29 Connecticut 343,953,840
30 Las Vegas-Paradise NV 204,436,140 30 Oregon 317,758,680
31 Indianapolis-Carmel IN 203,297,220 31 Kansas 305,230,560
32 Riverside-San Bernardino-Ontario CA 201,588,840 32 Utah 297,827,580
33 Tampa-St. Petersburg-Clearwater FL 201,588,840 33 Mississippi 289,285,680
34 Portland-Vancouver-Beaverton OR-WA 191,908,020 34 West Virginia 285,868,920
35 Oakland-Fremont-Hayward CA Metropolitan Division 190,769,100 35 Nevada 256,257,000
36 San Jose-Sunnyvale-Santa Clara CA 190,769,100 36 Arkansas 253,409,700
37 Columbus OH 190,199,640 37 Nebraska 253,409,700
38 Newark-Union NJ-PA Metropolitan Division 185,643,960 38 Idaho 167,990,700
39 Austin-Round Rock TX 182,227,200 39 New Mexico 162,865,560
40 Fort Worth-Arlington TX Metropolitan Division 182,227,200 40 Wyoming 160,018,260
41 Detroit-Livonia-Dearborn MI Metropolitan Division 169,699,080 41 Maine 146,351,220
42 San Antonio TX 167,990,700 42 Hawaii 141,795,540
43 New Orleans-Metairie-Kenner LA 166,851,780 43 Alaska 119,586,600
44 Charlotte-Gastonia-Concord NC-SC 164,004,480 44 New Hampshire 117,308,760
45 Richmond VA 162,296,100 45 North Dakota 115,030,920
46 Fort Lauderdale-Pompano Beach-Deerfield Beach FL Metropolitan Division 161,157,180 46 Montana 111,044,700
47 Omaha-Council Bluffs NE-IA 157,170,960 47 Delaware 89,974,680
48 Louisville-Jefferson County KY-IN 156,032,040 48 South Dakota 88,266,300
49 Jacksonville FL 154,893,120 49 Rhode Island 86,557,920
50 Oklahoma City OK 153,754,200 50 Vermont 55,237,620