Rosslyn, VA, February 2, 2008 — After seeing a modest downward trend for the past two years, NEMA’s Motors Shipments Index indicates demand for motors plummeted during the fourth quarter of 2008, declining 15.3% versus the July to September time period. The index was also 11.3% below its year-ago level, and registered its lowest reading since mid-2005. Moreover, in a break from prior quarters, shipments of both fractional and integral horsepower motors posted a year-over-year decline in shipments.
Official statistics show the U.S. entered a recession at the end of 2007 and virtually no evidence suggests that the economy has yet to emerge from the downturn. In fact, conditions for the economy as a whole have deteriorated further as a direct result of the credit crisis and a rapidly weakening labor market. Real GDP declined 3.8% during the fourth quarter of 2008, but would have seen a larger decline had it not been for an unexpected building in business inventories. To make matters worse, a similarly weak reading is anticipated for the current quarter, which would then mark the weakest stretch for aggregate U.S. economic performance since the early 1980s.
Even once-reliable sources of support have withered as the economic struggles felt within the U.S and Eurozone have affected other parts of the globe. The dollar’s recent strength against the euro, pound sterling and other major currencies (except for the yen) has reduced the global price competitiveness of U.S. goods exports. Domestic capital spending projections have taken a hit as well as companies have sharply reduced planned investment activities for 2009 in the face of tighter credit and sliding profits; this dampens prospects for industrial equipment and machinery such as fractional and integral horsepower motors even further. Consequently, NEMA/BIS anticipates the Motors Shipments Index will likely see additional declines at least into the second half of this year.