(NAED) — The electrical industry continues to evolve and with that brings new challenges and opportunities for growth. During the second quarter, labor and supply chain issues continued to impact businesses and consumers.
Last quarter we talked about the Fed firmly entering into a monetary tightening cycle with two rate hikes as of May. They followed that up with back-to-back hikes of 75 bps in June and July. Additional increases still appear to be on the near-term horizon as they strive to get inflation under control as quickly as possible. In this inflationary environment, it is important to remember that sales performance can be somewhat misleading. Although we likely will begin to see improvements towards in the final quarter of 2022, it is anticipated that supply chain issues, a tight labor market, and inflationary pressures will continue to be present throughout the rest of the year.
NAED’s Expected Sales Growth Index for Q3 fell to 3.40, down from 3.64 reported during the 2nd quarter of 2022. Developing economic factors might be playing a role in challenging optimism for the coming year. The percentage of companies that expect at least a moderate decline in sales over the next 12 months jumped to 23%, a 10-percentage point increase from the prior quarter.
The typical company expects capital spending to remain somewhat flat over the next 12 months. Of those expecting growth over the next 12 months, 7% believe there will be significant increases (more than 10%) and 35% expect moderate increases (between 4% and 10%).
Derived from a quarterly survey, State of Your Industry, that NAED has been conducting for 10 months, NAED’s Expected Sales Growth Index gauges leaders’ sales revenue expectations for the next 12 months. The survey also asks about capital spend, technology investment, sales backlog, inventory backlog, and much more, including current concerns. Results for the latest survey indicate that momentum comes with some unease as they are also occupied with availability of products/supplies, finding qualified employees, and cost of goods sold.
Building and construction data showed increased variability across the first and second quarters according to NAED’s Construction Index for Q3 (which helps to predict which Metropolitan Statistical Areas (MSAs) are poised for growth). Many markets showing the largest year-over-year percent changes were smaller-markets. In these markets, several large projects can quickly sway construction spending, and affect construction potential index scores in the near-term.
NAED’s full Economic and Industry Sector Outlook, which includes NAED’s exclusive Construction Index, is scheduled to be released on Friday, October 28th, 2022, and is free to all distributor members courtesy of Schneider Electric and Hubbell, Inc.
To find out more about the survey, contact NAED’s Business Intelligence Analyst, Erin Prinster. For more information on how to download or purchase NAED’s Economic and Industry Sector Outlook click here or contact NAED’s Member Engagement Team.
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