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Industrial Controls Index ticks higher during third quarter.
Press Release Summary:
Dec 07, 2009 - Demand for industrial controls increased moderately during third quarter of 2009, with NEMA's Primary Industrial Controls Index rising 1.6% versus April-June period. However, shipments remain low, with index more than 30% below third quarter of 2008. Primary Industrial Controls and Adjustable Speed Drives Index posted 0.9% increase over second quarter of 2009, but also continues to reflect lackluster demand with 29.5% decline on year-over-year basis.
Original Press Release
Industrial Controls Index Ticks Higher During Third Quarter of 2009
Press release date: Nov 18, 2009
Even the manufacturing sector, which experienced its deepest contraction in output since the Great Depression, has seen conditions improve over the past several months. Businesses continue to liquidate inventories, but that process appears to coming to an end. Also, orders for durable goods have started to trend higher and the capacity utilization rate reached its highest point since the end of 2008. Auto production accounts for a sizable chunk of this rebound in manufacturing indicators, as automakers have restarted production lines that were shut down or dramatically cut back during the summer and in some instances have raised production targets for the next few quarters. Nonetheless, even when one excludes the boost caused by the jump in auto production, other manufacturing industries are contributing to the gains in industrial output.
At the moment, a turn in the inventory cycle is providing a boost to production and will continue to do so into early 2010. Beyond that point, however, the manufacturing sector's recovery will likely fade a bit and place some downward pressure on demand for industrial control equipment. Indeed, with the national average capacity utilization rate still in the upper-60% range, a lot of productive capacity is still not in use and this will keep a lid on replacement demand for industrial equipment and machinery. Also, without a clear direction on the economic recovery or sufficient access to debt capital, companies will likely not be in any rush to ramp up investment plans and thus hold back on aggressively upgrading or replacing industrial controls and related types of machinery.
NEMA is the association of electrical and medical imaging equipment manufacturers. 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, industrial, commercial, institutional, and residential applications. The association's Medical Imaging & Technology Alliance (MITA) Division represents manufacturers of cutting-edge medical diagnostic imaging equipment including MRI, CT, x-ray, and ultrasound products. Worldwide sales of NEMA-scope products exceed $120 billion. In addition to its headquarters in Rosslyn, Virginia, NEMA also has offices in Beijing and Mexico City.
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