November 12, 2024
NEMA Survey Shows Cautious Optimism Amid Steady Conditions
Stakeholders report stable orders with supply chain challenges lingering
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 October Electroindustry Business Confidence Index survey was conducted in late October, prior to the U.S. presidential election and the Federal Reserve's latest interest rate cut.
The report highlights a steady economic landscape with some promising indicators for the coming months. While the current conditions component held at a robust 69.2, reflecting a positive trend compared to earlier in the year, industry stakeholders report a mixed bag of steady orders, lingering supply chain issues, and stable conditions. Despite this balance, it’s clear that confidence remains firmly in place, underpinned by the fact that no respondents reported worsening conditions.
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 held steady at 69.2, reflecting continued 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.” Panel member comments this month portray mixed sentiments, with some seeing stable orders while others report sluggish conditions and supply chain issues.
The median value for the magnitude of change in current conditions remained at 0.0, consistent with last month, while the mean was +0.5. Panelists are asked to report the magnitude of change on a scale ranging from –5 (deteriorated significantly) through 0 (unchanged) to +5 (improved significantly).
Matching a three-year high of 88.5 last reached in July, the future conditions component rebounded to 88.5 in October 2024, marking a continued positive outlook. Notably, no panel members expected "worse" conditions ahead, while 77 percent of panel members anticipated "better" conditions in six months, and 23 percent forecasted conditions to remain "unchanged."
Comments from panel members reflected optimism, citing the resolution of election uncertainty and the possibility of another interest rate cut as positive factors contributing to their outlook.
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 October 14-25, 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:
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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)
