Motors Index registers modest gain in 2nd quarter of 2008.

Press Release Summary:

According to NEMA's Motors Shipments Index, domestic shipments of motors increased 1.1% during 2nd quarter of 2008. Despite quarter-to-quarter increase, broader trend in motor demand remains on downward trajectory as index fell 5.1% on year-over-year basis and has declined in 6 of 7 quarters. Fractional horsepower motors remain weakest market segment, while demand for integral horsepower motors was at high level in Q2, and has registered only 1 quarter of declining shipments in past 4 years.

Original Press Release:

Motors Index Registers Modest Gain in Second Quarter of 2008

ROSSLYN, Va., August 19, 2008- Domestic shipments of motors increased 1.1 percent during the second quarter of 2008. Despite the second consecutive quarter-to-quarter increase, the broader trend in motors demand remains on a downward trajectory as NEMA's Motors Shipments Index fell 5.1 percent on a year-over-year basis and has declined in 6 of the last 7 quarters. Of the two major types of motors, fractional horsepower remains the weakest market segment, with inflation-adjusted shipments contracting on a year-over-year basis during the past seven quarters. By comparison, demand for integral horsepower motors was at a high level yet again in Q2, and has registered only one quarter of declining shipments in the past four years.

Whether the U.S. economy tips into recession later this year is an open question, but one point that is clear is that current domestic economic conditions are at their weakest since 2001. While real GDP expanded nearly 2 percent annualized during the second quarter (and forthcoming revisions will likely show growth well above that advance estimate) strong export activity has helped to offset the damage caused by the flagging housing market and credit crunch.

Indeed, the manufacturing sector has benefited immensely from exports, which have dampened the slowdown in domestic capital spending by offsetting the struggles felt in industries associated with the housing market and broader consumer spending patterns. The recent strengthening of the dollar along with economic weakness spreading through Europe and Asia jeopardizes the near-term outlook for manufacturing activity and will likely push the motors shipments index lower over the near term.

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, Sao Paulo, and Mexico City.

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