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Industry News
Lighting Systems Index Tumbles Sharply During The First Quarter Of 2009
May 14, 2009

NEMA’s Lighting Systems Index (LSI) declined 12.8 percent during the first quarter of 2009 when compared to the prior three-month period. Moreover, the index has registered new all-time low readings in each of the last two quarters. On a year-over-year basis, the LSI plunged nearly 22 percent and is down more than 26 percent from the cyclical peak level. Each category of lighting equipment covered in the index saw inflation-adjusted shipments decline significantly on a year-over-year basis, though ballasts and fixtures saw the most weakness compared to the first quarter of 2008.

The ongoing turmoil in the U.S. housing market continues to weigh heavily on demand for lighting equipment. After declining an additional 38 percent on an annualized basis during the first quarter of 2009, residential investment has contracted for 13 consecutive quarters. Although recent evidence suggests a bottom could be forming in new home sales, the deteriorating labor market and further expected declines in house prices point to lackluster demand for new residential construction activity going forward. Demand for residential lighting equipment has also been hurt by weak consumer spending, as households have increased savings and cut back on expenditures as a result of lower housing and stock portfolio values, not to mention the uncertainty created by high and rising levels of unemployment.

Lighting equipment demand in the nonresidential end-market is also deteriorating measurably as the downturn in commercial real estate gains momentum. Indeed, real investment in income properties, which include lodging, office, retail and industrial buildings, contracted 23 percent on an annualized basis during the first quarter of 2009—the largest decline since the end of 2001. With companies registering declines in profitability and struggling to acquire debt financing on capital markets, firms have delayed or canceled construction projects. In addition, given that layoffs remain at a high level as companies seek to rein in labor costs and production activity is idled due to a glut of inventories, lighting demand created by expanding or building facilities has eroded and will likely remain weak for several more quarters. Consequently, commercial lighting equipment demand will be under pressure well into 2010.

NEMA is the trade association of choice for the electrical manufacturing industry. Founded in 1926 and headquartered near Washington, D.C., its approximately 450 member companies manufacture products used in the generation, transmission and distribution, control, and end-use of electricity. These products are used in utility, medical imaging, industrial, commercial, institutional, and residential applications. Domestic production of electrical products sold worldwide exceeds $120 billion. In addition to its headquarters in Rosslyn, Virginia, NEMA also has offices in Beijing and Mexico City.

www.nema.org

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