Association News

NEMA announces decline of motor shipments in late 2007.

Press Release Summary:

Mar 04, 2008 - NEMA's Motors Shipments Index contracted 7.3% quarter-to-quarter during the last 3 month period of 2007. The weakness stems largely from a decline in fractional horsepower motor shipments, likely related to the U.S. housing market recession, but demand of integral horsepower motors has remained strong throughout the recent slippages in the top-line index. Further declines are likely as NEMA/BIS anticipates conditions underlying the fractional horsepower segment will worsen.

National Electrical Manufacturers Association (NEMA) - Rosslyn, VA

Original Press Release

Motors Shipments Decline Sharply to Close Out 2007

Press release date: Feb 25, 2008

NEMA's Motors Shipments Index contracted 7.3 percent quarter-to-quarter during the last three month period of 2007. On a year-over-year basis, the index fell nearly 7 percent and has slipped in four of the last five quarters. Over the full calendar year, the index declined 3.5 percent after posting two consecutive years of double-digit growth. The index's recent weakness stems largely from a precipitous decline in fractional horsepower motor shipments, a decline likely related to the U.S. housing market's recession. By contrast, demand for integral horsepower motors has remained strong throughout the recent slippages in the top-line index.

Fears of an impending recession have been stoked by a host of negative economic data in recent weeks. For example, the fourth quarter 2007 reading on real GDP showed the U.S. economy expanded at a mere 0.6 percent rate, the weakest performance since 2002. The ISM nonmanufacturing index showed the services side of the economy contracted in January, marking the first decline in service sector business activity in more than five years. In addition, indicators suggest no improvement any time soon in the housing market as construction activity continues to plummet, prices decline and foreclosures mount. On a more positive note, the manufacturing sector, notwithstanding a slump in fourth quarter output, has held fairly steady.

The industrial sector is expected to register steady growth going forward, thanks to export demand and to a lesser extent business investment and inventory replenishment. As a result, demand for integral horsepower motors is expected to support the overall index. Unfortunately, further declines in the index are likely as NEMA/BIS anticipates conditions underlying the fractional horsepower segment will worsen.

The NEMA Motors Shipment Index is a composite measure of NEMA-member companies' U.S. shipments of fractional and integral horsepower motors. Product shipments data are drawn from NEMA statistical surveys and are adjusted for inflation and seasonal fluctuations.

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.

Contact Brian Lego Director, Economic Analysis (703) 841-3295 bri_lego@nema.org