The National Electrical Manufacturers Association’s Motors Shipments Index, which measures quarterly shipments of integral and fractional horsepower motors adjusted for seasonality and inflation.  In the first quarter of 2007, this number increased 2.4 percent based on a quarter-to-quarter basis. On a year-over-year basis, the data suggest a flattening out in demand growth, as the index gained less than 1 percent. Since the first quarter of 2004, the motors shipment index has jumped approximately 60 percent.

Even thought the United States economy has shown signs of slowing, gains in motor demand have continued. The real GDP only increased a slight 1.3 percent during the first quarter of 2007—the slowest paced increase of U.S. growth since early 2003—and it could be revised to below 1 percent on further studies. This is caused mostly by the housing and government spending markets.

The market for integral horsepower motors remains healthy, with the improving situation for the rest of the manufacturing sector.

By contrast, end-market conditions have soured for fractional horsepower motors. One of the more important ultimate destinations for products containing fractional motors, the residential housing market, has experienced a dramatic deterioration the past several quarters. Single-family housing starts fell to a new cyclical low during the first quarter of 2007, which was also the measure’s lowest level in a decade, and recent building permits data point to little if any improvement through at least the end of this year.

At the same time, homebuilder confidence has retreated from a few months of modest gains; the NAHB housing market index slid to its lowest April reading on record, and measures of expected activity in the residential market over the next six months indicate a majority of builders see conditions getting worse before improving. Consequently, shipments of fractional horsepower motors could remain tepid in the coming quarters.

The NEMA Motors Index is a composite measure of NEMA-member companies’ U.S. shipments of fractional and integral horsepower motors. Product shipments data are drawn from NEMA statistical surveys and are adjusted for inflation and seasonal fluctuations.

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SOURCE National Electrical Manufacturers Association