Press Release Summary:
Following brief dalliance in growth territory 1 month ago, NEMA's Electroindustry Business Confidence Index for current North American conditions slipped from 52.2 to 47.8 in December. Though value of future conditions index increased to 45.7 from 37 in November, reading nonetheless amounts to forecast of continued modest deterioration in business conditions over first half of 2008. By contrast, indexes for other world regions all equaled or surpassed growth threshold mark of 50 in December.
Original Press Release:
Mixed Readings for December Symptomatic of Choppy North American Business Conditions
ROSSLYN, Va., December 21, 2007- Following a brief dalliance in growth territory a month ago, NEMA's Electroindustry Business Confidence Index (EBCI) for current North American conditions slipped from 52.2 to 47.8 in December. This suggests a modest reversal in business conditions from November, when survey results had signaled the first month-to-month improvement since April.
The EBCI indexes are measures of the diffusion of sentiment across the electrical manufacturing industry, with a reading above 50 indicating conditions favorable to industry expansion and vice-versa.
A companion measure, the mean degree of change in North American business conditions, registered a 0 (on a scale ranging from -5 [deteriorated significantly] through 0 [stayed the same] to +5 [improved significantly]) for a second straight month, implying a largely flat business environment since October.
The news from the future conditions index for North America was only slightly better. Though the value of the index increased in December to 45.7 from 37 in November, that reading nonetheless amounts to a forecast of continued modest deterioration in business conditions over the first half of 2008. December was the fourth consecutive month in which the future reading has registered below 50.
By contrast, current and future conditions indexes for the other world regions included in the EBCI survey all equaled or surpassed the "growth threshold" mark of 50 in December:
o The current conditions index for Latin America inched upward to 56.7, while the future conditions index retreated to 63.3.
o Current and future European conditions indicators rose to 61.5 and 50, respectively.
o The current conditions index for the Asia/Pacific region climbed to 82.1, while the future conditions index was unchanged at 67.9.
Region Current Conditions Six
Conditions Months From Now
(Compared to (Compared to
Previous Month) Current Conditions)
North America 47.8 45.7
Latin America 56.7 63.3
Europe 61.5 50.0
Asia/Pacific 82.1 67.9
Number of Respondents =23
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.
EBCI CONSTRUCTION DESCRIPTION: 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 confidence of the electroindustry in key world regions.
The survey contains the following questions:
1. How would you rate current economic conditions in the following regions, as they affect your business, compared to the previous month?
a. 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)]
2. How do you expect economic conditions in the following regions, as they affect your business, to have changed six months from now?
Respondents are asked to indicate whether conditions are better, worse or unchanged (or not available if their respective company does not do business in a particular region). The four regions are North America (Canada and the United States), Latin America (Mexico, Central America, and South America), Europe, and Asia/Pacific. 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 (formerly the National Association of Purchasing Management) in the construction of their manufacturing index.
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NEMA is the trade association of choice for the electrical manufacturing industry. Founded in 1926 and headquartered near Washington, D.C., its approximately 450 member companies manufacture products used in the generation, transmission and distribution, control, and end-use of electricity. These products are used in utility, medical imaging, industrial, commercial, institutional, and residential applications. Domestic production of electrical products sold worldwide exceeds $120 billion. In addition to its headquarters in Rosslyn, Virginia, NEMA also has offices in Beijing, São Paulo, and Mexico City.###NEMA. Setting Standards for ExcellenceVisit our website at www.nema.org