NEMA’s Primary Industrial Controls Index decreased 1.6% on a quarter-to-quarter basis during the fourth quarter of 2012. However, the index stands 5.1% above its year-ago level and 43% above the cyclical trough observed in mid-2009. Nonetheless, inflation- and seasonally adjusted shipments still remain below the pre-recession peak reached in 2007. The Primary Industrial Controls and Adjustable Speed Drives Index, a broader measure of industrial controls demand, also posted a slight decline during the fourth quarter of 2012, falling 0.3% following a 1.2% loss in the third quarter. However, the index increased 7.6% on a year-over-year basis.

The softening in the indexes has coincided with a slowdown in manufacturing activity. Although the sector experienced a surge in the first quarter of 2012, the rest of the year did not fare as well as factory production failed to top 2% in the last three quarters of 2012.  Still, the forward-looking ISM manufacturing index for new orders hovered above the break-even mark of 50 on average in the fourth quarter and suggests stronger improvement in the first half of 2013.  Production growth is forecasted at 1.4% year-over-year for 2013, before picking up to over 3% in 2014 amidst stronger demand domestically and globally. Industrial controls shipments are likely to see a similar trajectory.