September 10, 2024
Future Conditions "Strong" as NEMA Confidence Index Climbs
Survey shows growing market confidence, but panelists remain cautious about upcoming election 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.
The EBCI showed an uptick in August, reaching its highest level since February 2023. Most respondents reported stable conditions, with a third noting improvements, citing increased orders and robust market activity. Despite this positive outlook, concerns about market uncertainty and the upcoming election weighed on the sector. While future expectations slightly declined from July's peak, industry leaders remained optimistic, with many expecting business conditions to improve in the next six months.
This most recent ECBI shows how makers of electrical equipment view current and future market conditions. Below are the details:
The median value for the magnitude of change in current conditions remained at 0.0, consistent with last month, while the mean was +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).The median value for the magnitude of change in current conditions remained at 0.0, consistent with last month, while the mean was +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).
The electroindustry business confidence index current conditions component rose to 63.6 in August, the highest score since February 2023. Most respondents, 60 percent, described current conditions as “unchanged” while one-third considered them “better.” Panel members expressed a positive outlook, noting increased quote activity, a robust market, and rising order rates. However, they also highlighted concerns about the upcoming election and ongoing market uncertainty.
Following a three-year high at 88.5 in July, the future conditions component decreased to 83.3 In August 2024. Despite this softening, it marked the 15th consecutive month of growth. Two- thirds of the panel members expected “better” conditions in six months, while the remaining third anticipated “unchanged” conditions. No respondents indicated that they foresaw “worse” conditions in six months from now. Panel members commented they expect business to be strong six months from now.
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 August 13-26, 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)
