Seasonal influences drop industrial controls index in Q4
March 2, 2006
The indexĀs drop was attributed to typical seasonal weakness in fourth quarter sales, rather than any major slowing of the industrial controls market.
The Primary Industrial Controls Index published by NEMA declined 2.3% between 2005ās third and fourth quarters. The indexās drop was attributed to typical seasonal weakness in fourth quarter sales, rather than any major slowing of the industrial controls market.
The report says, compared to 2004ās fourth quarter (4Q04), sales of industrial control products and systems jumped 7.2%, marking the ninth consecutive quarter of year-over-year growth in the Index. The indexās annual average for 2005 was 87.7, which was a more than 5% gain versus 2004 and its highest reading since 2000.
NEMAās Primary Industrial Control and Adjustable Speed Drive Index fell 1.4% during 4Q05, which was also attributed to seasonal fluctuations, since sales growth on a year-over-year basis was robust, rising more than 12% versus 4Q04. The indexās annual average for 2005 set a new high since its inception in 2001, climbing more than 7% versus 2004.
The report adds short-term interest rates have had no measurable effect on the industrial controls market, despite the regular series of 25 basis point hikes by the U.S. Federal Reserve. However, the interest rate environment is expected to become more neutral with respect to demand for industrial control equipment, as most economists anticipate the Fed will stop raising the federal funds rate by its next meeting at the end of March 2006.
āManufacturing sector growth will remain a key source of demand for industrial controls and adjustable speed drives,ā says Brian Lego, NEMA's economic analysis director. āDuring the fourth quarter of 2005, the factory-operating rate registered its highest reading since the third quarter of 2000, and total manufacturing output excluding high-tech industries increased to a new all-time high.ā Lego adds that rebuilding hurricane-damaged Gulf Coast areas will bolster goods production during the first half of 2006.
The Industrial Control Business Indices are issued quarterly by NEMA. The Primary Industrial Control Index represents U.S. shipments for motor starters, contactors, terminal blocks, control circuit devices, motor control centers, sensors, programmable controllers, and other industrial control devices. Because these data have been collected for some time, the primary index illustrates the marketās trend over several years. This index represents monthly sales information collected by NEMA from its members, the major industrial control manufacturers in the U.S. market.
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