The third quarter of 2003 (3Q03) seemed to bring good news to many sectors of the U.S. economy. The nation's GDP appears to be heading for a 4% increase, which would be good news for everybody. It showed more than a 3% increase in 3Q03. The Control Engineering Index gained more than 10% during the third quarter, indicating that its member companies performed well as a group. This was paralleled by the 10% increase for 3Q03 in the NASDAQ index.

Besides the performance of their stocks, the earnings picture for many controls and automation manufacturers continues to improve. The Control Engineering Earnings per Share Index showed a marked increase in 3Q03, as it did in the previous quarter. Only two companies showed negative earnings, compared to four companies in 2Q03.

The Control Engineering Market Value Index showed a slight 3Q decline, smaller than the 2Q gain. This index is influenced, of course, by the size of participating companies, two of which account for 50% of the total market value in the index. Although Siemens showed a significant increase of 31% and Tyco posted a moderate 7%, these values could not overcome the 3Q03 decline of Honeywell (primarily due to higher pension expense), the index's third largest company, as well as the modest gains by the index's other firms.

The slow rebound of the U.S. economy has been thus far accompanied by a relatively low employment rate, though it was hoped that the recovery would quickly translate into more jobs. Advanced automation technologies continue to boost productivity despite the loss of more than 600,000 manufacturing jobs in the past year.