NEMA: More sustainable growth for controls in North America

By Control Engineering Staff November 17, 2006

A declining housing industry is tempered by a recent overall gain in business confidence, according to recent reports from the National Electrical Manufacturers Association (NEMA) . The mixed economic indicators translate into NEMA’s prediction for slower, more sustainable growth for the electrical industry in North America. On Nov. 6, NEMA reported that its Primary Industrial Controls Index fell 2.8% between the second and third quarters of 2006. That’s the second consecutive quarter-to-quarter decline in the index since the second half of 2002, the association says.

“Conditions have clearly cooled down from the torrid pace of last year as the topline index dropped 0.1% on a year-over-year basis, which represents the first such decline in three years,” the NEMA statement says. A broader measure of demand for industrial controls, the Primary Industrial Controls and Adjustable Speed Drive Index, also contracted during the third-quarter 2006, down 1% from the prior quarter.

“However, trend growth in the broader industrial controls market remains positive,” NEMA says, given the index’s 3.2% gain compared to third-quarter 2005. Reasons include a declining housing industry, slower growth in production and new orders of manufactured goods, a decline in manufacturing output, and another below 50 reading of NEMA’s Electroindustry Business Confidence Index (EBCI), indicating the sector is no longer expanding.

“Despite these emerging signs of weakness, an economic recession is improbable. Instead, the U.S. economy is likely transitioning into a stage characterized by a slower, more sustainable rate of growth. In addition, the backdrop for business capital spending, that is, record corporate profits and strong replacement demand, should allow demand for industrial controls and adjustable speed drives to expand modestly going forward,” NEMA says.

And while the EBCI is below 50, it rebounded in October following five consecutive monthly declines. Although the index, at 44 points, again fell short of the 50-point threshold (above 50 indicates expansion), these latest results suggest that the rate of deterioration in business conditions slowed appreciably during October relative to the prior month, NEMA reports in a separate analysis.

Search on market update atop for related news. Also NEMA’s Web pages contain more on how the business and economy influence manufacturing, the electrical industry, and controls.

Edited by Mark T. Hoske , Control Engineering editor in chief