NEMA sees robust industrial control business growth

By Plant Engineering Staff January 3, 2006

Sales of industrial control products and systems, as measured in NEMA’s Primary Industrial Controls Index, increased 3% during the third quarter of 2005. The index jumped by 5.5% compared to the same period a year ago, according to NEMA. With its eighth consecutive quarterly gain, NEMA’s Primary Industrial Controls Index is now 24% above the market’s recessionary low point. “Consequently,” said Brian Lego, NEMA’s director of economic analysis, “these data indicate a period of increasingly robust growth for an industry that was hit hard by the protracted weakness in U.S. manufacturing activity.”

The Primary Industrial Control and Adjustable Speed Drive Index gained 4.2% between the second and third quarters of 2005. In addition, sales growth accelerated for this market segment, as the index posted a 9.6% gain when compared to the third quarter of 2004. “The most recent quarter’s reading nearly eclipsed the index’s all-time high and represents a 27% increase in overall sales since the close of 2002,” Lego said.

Manufacturing activity is expected to remain a positive driver for industrial controls demand. The factory-operating rate increased to its highest point in five years during the third quarter of 2005 and total manufacturing output has been on the rise in the last nine quarters. In fact, manufacturing activity has rebounded strongly enough that certain industries are slated to undergo capacity additions. The manufacturing sector is expected to see a re-acceleration in output during 2006 as hurricane-related rebuilding in the Gulf Coast begins in earnest.

Healthy demand for industrial machinery and equipment has bolstered demand for industrial automation systems. After an unexpectedly weak second quarter, in which real business investment in industrial equipment declined measurably, this measure jumped more than 20% during the third quarter, marking the largest one-quarter jump in more than a decade. “There was a pullback in industrial machinery production during the third quarter, but this is expected to be temporary,” Lego said. “Indeed, output growth is expected to average more than 6% until late 2007 as domestic companies, many of which are seeing profits soar, replace old equipment or expand capacity.”