July 9, 2024
NEMA Survey Reveals Positive Six-Month Outlook
Future conditions component among electrical manufacturers peaks at highest level since Spring 2021
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.
The future conditions component surged to its highest level since Spring 2021, reflecting growing optimism about the next six months. After a period of decline and stagnation, current conditions improved in June, with most respondents reporting unchanged or better conditions. Panel comments were mixed, highlighting both increased orders and concerns about political instability. Despite this, the future outlook remains positive, with panelists expecting improved financial conditions, increased orders, and easing interest rates.
This most recent ECBI shows how makers of electrical equipment view current and future market conditions. Below are the details:
After three months of decline and stagnation, the current conditions component increased to 57.7 in June, elevating it back to the robust levels seen at the beginning of the year. The majority of respondents, 69 percent, report that current conditions are “unchanged” and 23 percent report current conditions are “better”. This sentiment was echoed in panel members’ comments, which were mixed as some noted increased orders and investments in data centers while others expressed concerns about political instability, market uncertainty, and sluggish business.
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 was +0.1. Panelists are asked to report the magnitude of change on a scale ranging from –5 (deteriorated significantly) through 0 (unchanged) to +5 (improved significantly).
In June 2024, the future conditions component reached 84.6, marking the 13th consecutive month of expected growth in the period six months ahead and its highest reading in more than three years. Over two-thirds of the panel members predicted “better” conditions, and none indicated that they foresee “worse” conditions in six months from now. Comments on conditions in the next six months were positive with panel members expecting orders to increase, financial conditions to improve, and interest rates to ease.
SURVEY RESULTS:
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Values reflect the percentage of respondents expecting "Better" conditions, plus one-half of the percentage of respondents expecting "Unchanged" conditions.
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A score of 50 or higher suggests conditions appropriate to expansion of the electroindustry sector.
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Please note that survey responses were collected from the period of June 10-21, 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:
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How would you rate current economic conditions in North America, as they affect your business, compared to the previous month?
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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)]
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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)
