Motors shipments slip in third quarter

The NEMA Motors Shipments Index dropped between the second and third quarters of 2007 and was down 3.1% on a year-over-year basis.

12/07/2007


The NEMA Motors Shipments Index, a composite measure of NEMA-member companies’ U.S. shipments of fractional and integral horsepower motors, dropped 4.5% between the second and third quarters of 2007, and was down 3.1% on a year-over-year basis. Moreover, topline index has fallen in three of the last four quarters, which suggests that although demand for motors remains at a high level, it has clearly trailed off from cyclical highs.
The recent drop in fractional and integral HP motors demand came despite an uptick in broader macroeconomic growth. Real GDP increased by an average annual rate of 3.9 % during the third quarter of 2007, up slightly up from the 3.8% annualized gain during the April to June period, NEMA said. The primary concern with respect to the economy as a whole remains the housing market. Virtually all indicators point to a deepening of the housing market’s problems, which include falling prices, rising foreclosure rates and declining construction activity, over the course of the next several months and likely well into the second half of 2008, as the subprime mortgage crisis continues to unfold. The industrial sector remains in better shape, thanks to solid growth in output and business capital spending; however, confidence levels have slipped among manufacturers due to looming uncertainty over the economy’s trajectory and ebbing corporate profits.
Going forward, shipments of integral horsepower motors are expected to increase thanks to steady replacement and business investment demand. While that will buoy the overall total, the fractional horsepower segment is expected to weigh on the index over the next several quarters as crucial domestic end-markets will likely see conditions worsen. Consequently, NEMA/BIS anticipates the Motors Shipments Index will post modest declines over the near term.





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