After an extraordinarily 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 EBCI is a monthly survey of electrical manufacturers conducted by the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.
The index posted its fifth consecutive monthly decline, falling 10.2 points to 36 points, below the 50-point threshold indicative of expansion. While the North America future conditions index also remained below 50 points, it rebounded to its highest level since June, rising nearly nine points from a month ago to 26 points. The September EBCI indicators for each of the other three world regions included in the survey pointed to current and continued growth.
NEMA said the recent deterioration of the North American index should be viewed in the context of the solid economic conditions its members have enjoyed recently. Robust demand for electrical equipment in the manufacturing and construction sectors and the added stimulus of Gulf Coast relief led to rates of capacity utilization in the factories of U.S. electrical equipment manufacturers of close to 94 percent by late summer 2006, the highest in more than 30 years.
U.S. shipments of electrical equipment averaged nearly 12 percent growth during the 12-month period ended in July. NEMA was not surprised such dramatic growth would eventually wane, or that its members are cautious about the future. “Business activity has softened,” said one manufacturer. “Incoming order rates are off 15 percent to 20 percent compared to the first half of the year.”
However, several respondents hadn't seen such a dramatic slowdown. “Demand continues to be substantial,” said one NEMA member. “There's only a few signals indicating a measurable slowdown. I expect to see slowing in this calendar year.” Added another manufacturer, “We are watching for the clear sign of decline, and it keeps fooling us with steady performance.”
Vital Statistics
CONSTRUCTION
New Construction Put-in-Place ($/billions, SAAR)
Aug '061
Jul '062
Mo. % Change
Aug '05
YTY % Change
Total Construction
1,200.7
1,196.8
0.3
1,150.3
4.4
Total Private Construction
929.1
927.9
0.1
902.7
2.9
Residential (inc. Improvements)
617.0
626.2
-1.5
650.8
-5.2
New single family
400.3
411.5
-2.7
441.3
-9.3
New multi-family
55.7
55.5
0.3
49.8
11.8
Lodging
20.5
20.1
1.8
12.4
65
Office
45.4
44.1
3.1
35.6
27.5
Commercial (inc. Farm)
81.0
77.0
5.2
69.1
17.1
Health Care
33.6
32.6
3.1
29.3
14.6
Educational
13.3
13.3
0
12.8
4.3
Religious
8.2
8.1
1.4
7.5
8.7
Amusement and Recreation
9.5
9.0
4.8
7.2
31.6
Transportation
8.4
9.0
-6.9
7.3
15
Communication
15.3
14.9
2.4
13.4
14.1
Power (inc. Gas and Oil)
34.7
34.6
0.5
24.3
42.7
Electric
22.5
23.4
-3.6
16.1
40.1
Manufacturing
40.5
37.5
8.2
31.6
28.4
Public construction ($/billions)
271.6
268.8
1.1
247.6
9.7
Residential
8.6
8.4
2.6
8.2
4.5
Office
10.8
10.8
0.7
10.3
4.8
Commercial
3.8
3.9
-1.4
4.7
-19.1
Health care
9.6
9.6
0.6
9.1
6.1
Educational
70.7
70.2
0.7
66.2
6.7
Public safety
10.1
9.9
1.5
9.6
4.3
Amusement and recreation
13.3
13.3
0.0
11.2
19.3
Transportation
21.6
21.4
0.7
19.8
8.7
Power
7.6
6.3
19.9
8.3
-8.4
Highway and street
77.9
77.6
0.4
66.2
17.6
Sewage and waste disposal
19.0
18.8
1.2
16.2
17.6
Water supply
12.8
12.6
1.6
11.8
8.4
Conservation and development
5.0
5.4
-6.4
5.2
-3.9
Housing starts (SAAR)
Aug '061
Jul '062
Mo. % Change
Aug '05
YTY % Change
Total (millions of units)
1.665
1.772
-6.0
2.075
-19.8
Single-family (millions of units)
1.360
1.445
-5.9
1.713
-20.6
Multi-family (thousands)
265
245
8.2
319
-16.9
EMPLOYMENT WAGE & PRICE STATISTICS
Mo.
Latest Month
Mo. % Change
Year ago
YTY % Change
Employment, Electrical Contractors (thousands)
902.8
JUL
1.1
879.3
2.7
Hourly wage, Electrical Contractors ($$$)
22.28
JUL
0.2
21.72
2.6
Copper prices (cents per pound)
353.14
SEP
-1.1
179.36
96.9
INDUSTRIAL MARKET
Mo.
Latest Month
Mo. % Change
Year ago
YTY % Change
Electrical Mfrs' Shipments ($/billions)
3.268
JUL
2.0
2.941
11.1
Electrical Mfrs' Inventories ($/billions SA)
4.739
JUL
2.1
4.048
17.4
Electrical Mfrs' Inventory-to-Shipments ratio
1.450
JUL
0.1
1.373
5.6
Electrical Mfrs' New Orders ($/billions SA)
3.508
JUL
-12.8
3.161
11.0
Machine tool orders ($/millions)
278.47
JUL
-14.6
220.21
26.5
Industrial Capacity Utilization (Percent, SA)
82.4
AUG
-0.3 pts.
80.3
1.9 pts.
Purchasing Managers Index (Percent)
52.9
SEP
-1.6 pts.
59.4
6.5 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.
