April 10, 2024
NEMA Industry Survey: Steady with a Dash of Caution
Future outlook dips slightly amidst economic and political uncertainties
Each month, the National Electrical Manufacturers Association (NEMA) publishes the Electroindustry Business Confidence Index (EBCI). The index is based on surveys of senior managers at NEMA member companies – designed to gauge the business environment of the electroindustry in North America. Member companies include most of the ten largest lighting manufacturers in North America, along with other manufacturers of lighting, electrical and medical imaging products.
In the latest NEMA industry survey, a subtle shift in sentiment was noted as economic and political uncertainties loomed, casting a slight shadow over future outlooks. March saw a noticeable uptick in respondents reporting steady, unchanged conditions, climbing from 54% in February to 67%, leading to a dip in the current conditions index to 53.5. Amidst stable yet cautious tones in member feedback, a concern over slowing orders due to high inventory levels was highlighted, even as major projects continue apace.
This most recent ECBI shows how makers of electrical equipment view current and future market conditions. Below are the details:
In February just over half (54%) of panel members reported “unchanged” conditions. That number increased to 67 percent in March. The increase of respondents reporting “unchanged” conditions led to a decrease in the current conditions component to 53.5 points in March, down from the previous month’s 57.7. The member comments were mixed but focused on stability. Members mentioned stable conditions and no significant changes.
Some comments noted mega projects continuing and quotations still at record levels, with the caveat that incoming orders have slowed due to excessive inventory levels. The median value of responses regarding the reported magnitude of change in current conditions remained at 0.0, which is unchanged from last month. The mean also held steady at +0.2. Panelists are asked to report the magnitude of change on a scale ranging from –5 (deteriorated significantly) through 0 (unchanged) to +5 (improved significantly).
Similar to current conditions the percent of respondents expecting to see “unchanged” conditions in six months increased, while those expecting “better” conditions decreased this month. The shift in expectations from better to unchanged led to a 3.6 point drop from the February reading to 73.3 for March’s future conditions component. The comments were mixed with some sounding a note of caution regarding inflation and signs of slowing in some sectors of the economy, with uncertainty surrounding this year’s election cycle also receiving attention.
SURVEY RESULTS:
- Values reflect the percentage of respondents expecting "Better" conditions, plus one-half of the percentage of respondents expecting "Unchanged" conditions.
- A score of 50 or higher suggests conditions appropriate to expansion of the electroindustry sector.
- Please note that survey responses were collected from the period of March 11-22, 2024.
EBCI METHODOLOGY:
The EBCI indexes are based on the results of a monthly survey of senior managers at NEMA member companies and are designed to gauge the business environment of the electroindustry in North America (defined here as the United States and Canada).
The survey contains the following questions:
- How would you rate current economic conditions in North America, as they affect your business, compared to the previous month?
- Using the following scale, please describe the magnitude of change in economic conditions in North America this month compared to economic conditions last month? [Scale structured as follows: 5 (improved significantly), 4, 3, 2, 1, 0 (stayed the same), -1, -2, -3, -4, -5 (deteriorated significantly)]
- How do you expect economic conditions in North America, as they affect your business, to have changed six months from now?
Respondents are asked to indicate whether conditions are better, worse, or unchanged. The survey also provides space for respondents to comment on current conditions. These comments are included below the table containing the index levels.
The index value is the percentage of respondents expecting “Better” conditions, plus one-half of the percentage of respondents expecting “Unchanged” conditions, which follows the methodology used by the Institute for Supply Management (ISM; formerly the National Association of Purchasing Management) in the construction of their manufacturing index.
Reprinted by permission of the National Electrical Manufacturers Association (NEMA)
