NEMA reports rise of industrial controls demand in Q3 2007.

Press Release Summary:

NEMA's Primary Industrial Controls Index registered a 0.6% gain between the second and third quarters of 2007. Growth was stronger for the Primary Industrial Controls and Adjustable Speed Drives index, which increased 2.5% from the second quarter. Along with real GDP of 3.9%, gains came amid recession in housing market, with economic growth bolstered by factors such as consumer spending, inventory investment, and an improved balance of trade.

Original Press Release:

Demand for Industrial Controls Continues to Rise During Third Quarter of 2007

ROSSLYN, Va., - NEMA's Primary Industrial Controls Index registered a 0.6 percent gain between the second and third quarters of 2007, and rose more than 12 percent higher compared to the same period a year ago. In addition, the topline index surpassed the previous cyclical high set last quarter and has increased 32 percent since late 2003. Growth was slightly stronger for the Primary Industrial Controls and Adjustable Speed Drives index, which is a broader measure of demand for industrial control equipment, as it increased 2.5 percent from the second quarter and 12.8 percent versus the third quarter of 2006.

Continued growth in industrial control shipments was not unexpected as domestic economic activity expanded at a solid pace during the third quarter of 2007. Indeed, real GDP increased 3.9 percent following 3.8 percent growth during the second quarter of this year. Moreover, these gains came amid the ongoing recession in the housing market, where construction activity continues to plummet, prices are falling and homebuilder confidence is flagging. Aggregate economic growth was bolstered by consumer spending, inventory investment, an improved balance of trade, increased capital spending activity and higher federal government expenditures.

Although measures of confidence among manufacturers have slipped in recent months, indicators of the industrial sector's performance have remained in solid shape. Pockets of weakness do exist, namely domestic auto manufacturers and industries tied heavily to the residential construction sector, but overall data on industrial output, capacity utilization and orders for durable goods continue to steadily improve. The outlook for the manufacturing sector as a whole is positive, but not particularly strong. Near-term growth in industrial output will rely heavily on business investment and export demand. While many businesses are beginning to wrap up their major capital spending projects of the past few years, enough demand should remain in the pipeline to keep durable goods production expanding through 2008. In addition, a weakening dollar has increased the price competitiveness of domestically-produced industrial equipment; since global economic growth is expected to continue moving along at a healthy pace going forward, and the dollar remains under downward pressure, export demand for U.S.-produced capital goods is expected to remain at a high level.

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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