May 14, 2008—Rosslyn, VA: NEMA’s Lighting Systems Index increased 1.1% during the first quarter of 2008. Still, the U.S. lighting market remained in a broader slump for the second straight quarter, and the index was down more than 5% from its year-ago level. Of the index’s underlying market segments, the value of shipments was down on a seasonal- and inflation-adjusted basis for ballasts, fixtures and large lamps, while emergency lighting equipment and miniature lamps registered gains from the prior quarter and versus the first quarter of 2007.

Residential demand for lighting has slumped over the past several quarters, as housing market turmoil continues unabated. Indeed, further deterioration of several market indicators over the past few months suggests conditions are unlikely to stabilize before late 2008. Moreover, any improvements will be slow and modest at best in the near term as high inventory levels keep a lid on prices and construction activity.

Nonresidential construction activity has until recently served as a stopgap to overall construction activity, offsetting the hit to demand caused by the flagging residential sector; however, this segment is also beginning to lose some steam. Data from the first quarter of 2008 show overall spending on commercial, industrial and other related nonresidential buildings sank by its largest annualized rate in nearly three years. Recent evidence suggests more trouble could lie ahead. For example, the American Institute of Architects (AIA) billings index fell to the lowest level recorded in the 12-year history of the series. This forward-looking indicator showed inquiries sliding to an all-time low, with readings for firms specializing in commercial and industrial work especially weak. Overall, tighter lending standards, slower profit growth, rising energy costs and a multitude of other financial and economic concerns pose significant headwinds to nonresidential construction activity. By extension, lighting equipment demand will be hampered by these headwinds, even as the Energy-Efficient Commercial Buildings Tax Deduction prompts property owners to invest in efficient lighting systems over the next few quarters.