Business conditions in the North American electrical market took a strong step forward in May, according to NEMA's Electroindustry Business Confidence Index (EBCI), a monthly survey of senior executives at member firms of the National Electrical Manufacturers Association (NEMA), Rosslyn, Va.

The EBCI index for North America continued on an upward track in May, surpassing the 50-point level indicative of growth in the industry for the 25th month in a row. At 63, the North America index recorded a gain of almost eight points from April.

Expectations for economic conditions in the electrical industry six months from now were largely similar to those reported for April, and again conveyed positive sentiment in all regions surveyed except for Europe. The North America and Asia/Pacific indices saw very slight declines from a month ago to 62.5 and 71.9, respectively. Future sentiment for Latin America registered an upward tick to 70. Europe's index, meanwhile, fell precipitously. At 32.1, it dropped from 53.8 in April to its lowest level since November 2001.

One EBCI panelist said the cost of materials is still a major concern. “It seems a lot of commercial projects have been put on hold,” he said. “It's possible that the cost of steel and concrete, as well as increases in other building materials, is starting to cause projects to be reevaluated.”

Added another NEMA member, “It looks as if the sharp run-up in raw materials prices has distributors and purchasing agents keeping a tight rein on inventory spending.”

Some respondents' comments reflected optimism that the pace of nonresidential construction would pick up. Said one industry executive, “The recovery in nonresidential has yet to get off the ground. Until that happens, a large proportion of the electrical industry is going essentially nowhere. We still think that recovery in nonresidential work will begin in the second half of 2005.”

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