September 10, 2024
NEMA Confidence Index Holds Strong Amid Economic Uncertainty
Industry leaders remain optimistic despite looming election and interest rate concerns
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 September 2024 EBCI report highlights a significant improvement in current business conditions, reflecting a growing sense of optimism among industry leaders. The index for current conditions rose notably, with none of the respondents reporting a decline, although some noted uneven incoming orders despite record quotation levels. Looking ahead, confidence in future conditions remains positive, though tempered by concerns about election uncertainty and fluctuating interest and labor rates.
This month's report highlights both ongoing recovery and the cautious optimism.
This most recent ECBI shows how makers of electrical equipment view current and future market conditions. Below are the details:
This month, the electroindustry business confidence index current conditions component surged to 69.2, reflecting a notable improvement among industry stakeholders from a low of 46.7 points earlier this year.
Thirty-eight percent of panel members reported that current conditions are “better,” while none indicated a decline, and 62 percent deemed the situation as “unchanged.” Comments this month presented a mixed bag of sentiments, with some respondents highlighting record levels of quotations while also noting that incoming orders have been somewhat uneven. Panel members noted that while the interest rate reduction has materialized, some are still seeing election uncertainty and cautious customers.
The median value for the magnitude of change in current conditions remained at 0.0, consistent with last month, while the mean was +0.4. Panelists are asked to report the magnitude of change on a scale ranging from –5 (deteriorated significantly) through 0 (unchanged) to +5 (improved significantly).
Following a three-year high of 88.5 in July, the future conditions component has decreased to 80.8 in September 2024. Despite this decline, it marks the 16th consecutive month of growth. An encouraging 69 percent of panel members expect “better” conditions in six months, while 23 percent anticipate conditions will remain “unchanged.” However, 8 percent predict “worse” conditions ahead. Comments from panel members highlighted concerns about election uncertainty and the future volatility of interest and labor rates.
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 September 11-25, 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)
