NEMA's Electroindustry Business Confidence Index (EBCI) for current North American business conditions held steady in the high-60 range for the third straight month in April, indicating that industry sentiment remains bullish. The EBCI is a monthly survey of electrical manufacturers conducted by the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.
Indeed, with April's reading of 66.7 points, the monthly index has been riding above the 50-point threshold indicating positive growth for three full years. The index for future North American conditions receded to 51.9 points, still a positive reading, but a significant decline from March's 58.1.
The major difference in the April EBCI compared with the March reading was the degree of caution regarding future conditions in North America. While measures of Latin American, European and Asian future sentiment remained close to their month-ago levels (also at or above 60 points), the drop in the North American index for future conditions indicated some underlying uneasiness about the health of the U.S. economy down the road.
At least one panelist said he didn't think the current level of activity could be sustained. Other comments reflected concerns that a genuine deterioration in the economy will hamper the industry. The steady drumbeat of interest rate hikes, energy and metals cost inflation, an uncertain housing market, and geopolitical tensions were all cited as potential impediments to future growth. One electrical manufacturer said, “Bookings are going gang busters. I would like to hope they can continue for the balance of the year, but I have my doubts given the continuing Fed actions on interest rates. Cost increases for commodity metals are again putting pressure on margins.”
Another manufacturer said it was hard to develop a forecast based on the extraordinarily increases for the first quarter of 2006. “The numbers just look too large, he said. “But with interest rates rising, oil and copper prices through the roof, and Iran going nuclear, things will likely slow down some before fall.”
Vital Statistics
CONSTRUCTION
New Construction Put-in-Place ($/billions, SAAR)
Mar. '061
Feb. '062
Mo. % Change
Mar. '05
YTY % Change
Total Construction
1,199.1
1,188.7
0.9
1,106.4
8.4
Total Private
940.8
930.9
1.1
864.1
8.9
Residential (inc. Improvements)
672.9
662.6
1.6
619.7
8.6
New single family
459.2
456.8
0.5
404.5
13.5
New multi-family
54.0
53.1
1.8
43.5
24.2
Lodging
14.0
13.6
3.2
12.0
17.5
Office
38.6
39.2
-1.7
34.7
11.2
Commercial (inc. Farm)
70.1
69.7
0.6
64.5
8.7
Health Care
30.3
30.8
-1.6
26.9
12.7
Educational
13.9
13.7
2.0
12.8
9.1
Religious
8.0
7.8
2.1
8.0
-0.6
Amusement and Recreation
9.0
9.1
-1.2
8.5
5.6
Transportation
8.3
8.2
2.0
6.2
34.9
Communication
16.1
15.7
2.9
14.2
13.6
Power (inc. Gas and Oil)
25.3
26.9
-5.8
26.2
-3.3
Electric
32.6
32.3
0.9
29.0
12.5
Manufacturing
30.4
30.9
-1.4
27.3
11.3
Public construction ($/billions)
258.2
257.8
0.2
24.2
6.6
Residential
7.0
6.9
1.8
6.9
1.3
Office
11.0
10.8
1.9
11.8
-7.2
Commercial
5.2
4.9
6.2
5.1
0.6
Health care
8.6
8.4
3.2
8.4
2.5
Educational
68.6
69.2
-0.8
61.9
10.9
Public safety
10.5
10.1
3.8
8.5
23.8
Amusement and recreation
11.7
12.1
-3.3
10.7
9.8
Transportation
19.8
19.6
1.2
19.8
-0.1
Power
8.7
8.2
5.3
10.9
-20.3
Highway and street
69.4
69.7
-0.4
66.2
4.9
Sewage and waste disposal
19.6
19.7
-0.5
15.2
29.0
Water supply
12.0
12.1
-0.5
11.5
4.7
Conservation and development
5.6
5.6
-0.5
4.8
15.9
Housing starts (SAAR)
Mar. '061
Feb. '062
Mo. % Change
Mar. '05
YTY % Change
Total (millions of units)
1.960
2.126
-7.8
1.833
6.9
Single-family (millions of units)
1.591
1.807
-12.0
1.550
2.6
Multi-family (thousands)
334
283
18.0
249
34.1
EMPLOYMENT WAGE & PRICE STATISTICS
Mo.
Latest Month
Mo. % Change
Year ago
YTY % Change
Employment, Electrical Contractors (thousands)
864.7
FEB
0.5
832.7
3.8
Hourly wage, Electrical Contractors ($$$)
21.87
FEB
0.8
21.34
2.5
Copper prices (cents per pound)
274.06
APR
15.9
153.34
78.7
INDUSTRIAL MARKET
Mo.
Latest Month
Mo. % Change
Year ago
YTY % Change
Electrical Mfrs' Shipments ($/billions)
3.359
FEB
-1.1
2.999
12.0
Electrical Mfrs' Inventories ($/billions SA)
4.591
FEB
0.5
4.194
9.5
Electrical Mfrs' Inventory-to-Shipments ratio
1.367
FEB
1.6
1.398
-2.3
Electrical Mfrs' New Orders ($/billions SA)
3.572
FEB
-3.8
3.164
12.9
Machine tool orders ($/millions)
269.1
FEB
25.3
235.4
14.3
Industrial Capacity Utilization (Percent, SA)
81.3
MAR
0.3 pts.
79.9
1.4 pts.
Footnotes: 1-Preliminary; 2-Revised; 3-Includes residential improvements; Z -less than 0.005 percent. SA - seasonal adjusted; SAAR - seasonally adjusted annual rate. Sources: Construction Put-in-Place statistics - Department of Commerce; Housing starts - Department of Commerce's Census Bureau; Electrical contractor employment numbers and hourly wage - Department of Labor; Copper prices - Metals Week; Electrical manufacturers' shipment data - Department of Commerce; Machine Tool Orders - Association for Manufacturing Technology; Industrial Capacity of Utilization - Federal Reserve Board; and Purchasing Managers Index - Institute for Supply Management.
Note: Additional economic data relevant to the electrical industry is available on a bi-weekly basis by subscribing to Electrical Marketing newsletter. For subscription information seewww.electricalmarketing.com.
