The economy continues to be on everyone's mind, as people wait for a decisive indicator that economic conditions have turned the corner and are on the upswing. While changes to the economic indexes that are related to the design and construction industries appear to have stabilized of late, settling down from their dramatic highs and lows experienced throughout the past year, current reported numbers in the field of lighting are off by a quarter. This is most likely a reflection of the delay from the architect down to the consultant level, and it makes analyzing the data more difficult to decipher and to find out what the numbers mean for the industry's recovery.
For example, the American Institute of Architects' Architecture Billings Index (ABI) reported a drop of 3 points for the month of January—down to 42.5. This is a decline from the December 2009 reading of 45.4. The ABI is a leading economic indicator of construction activity and reflects an approximate nine- to 12-month offset between architecture billings and construction spending.
However, the National Electrical Manufacturers Association's (NEMA) Lighting System Index (LSI) reported its fourth-quarter 2009 results at the end of February. While not as up-to-date as the ABI, the LSI's data does give us some insight into the progress of recovery in the lighting industry. The LSI, which reflects the demand for lighting equipment, rose 4.1 percent in the fourth quarter of 2009. All luminaire categories showed an increase except for emergency lighting. The large lamp categories in particular saw an increase in shipments. The increase was the first time since 2007.
NEMA's lamp indexes for both incandescent and compact fluorescent lamps (CFLs) also were on the rise at the close of the fourth quarter of 2009—by 6.7 percent and 15.5 percent, respectively. This helped stave off the declines these two sectors have seen over the past year. Generally speaking, CFLs continue to lose market share to incandescent lamps. This suggests that consumer demand has a hit a plateau. The cause for this market shift can be linked to lamp price points—CFLs typically are more expensive than incandescents—which is certainly a consideration for cash-strapped consumers.
Last but not least, NEMA's Electroindustry Business Confidence Index (EBCI) for current North American conditions managed significant gains—7.4 points—for the second straight month in February, reaching its highest level—64.6 points—in more than four years. The EBCI had already achieved a nine-point increase in January. The EBCI for future conditions lost some ground in February—7.7 points—but still remained strong overall at 70.8 points, well above the 50-point mark that indicates improved business conditions.
The key to attempting to diagnose the industry's health for this year will be found in watching the specific sectors—commercial and residential. The housing market did see some recovery in 2009, but that has not necessarily translated into significant increases for residential lighting. It also is generally acknowledged across the industry that 2010 will be a tough year for commercial buildings, since the number of new construction projects will be limited. However, retro-fit opportunities might make up some of the gap for commercial lighting. One potential bright spot will be the outdoor lighting category, as these projects will benefit from money that will be spent from the American Recovery and Reinvestment Act. Overall, prudent vigilance remains the economic constant.