Industry News
NEMA's Lighting Systems Index Slides During Fourth Quarter Of 2008
February 12, 2009
NEMA’s Lighting Systems Index (LSI) contracted 4.8 percent between the third and fourth quarters of 2008. Shipments of lighting equipment have declined during six of the last seven quarters, but this most recent quarter-to-quarter drop in shipments was the fastest since 2001.
In fact, the index is now at its lowest level in the series’ brief history. On a year-over-year basis, the LSI posted a decline of 11.2 percent and is more than 16 percent lower than its cyclical peak level, which was observed in early 2006. Every major category of lighting equipment saw shipments decline on a year-over-year basis, but the most significant weakness occurred for large lamps and fixtures.
Virtually all major end markets for lighting equipment are struggling. Demand for residential lighting has contracted sharply for the past 2-plus years as a result of the housing market’s collapse. Homebuilding activity has dropped to its lowest level on record, as prices have plummeted and many local markets remain awash in inventories of foreclosed homes. At the same time, underlying housing demand has been decimated by deteriorating labor market conditions and tighter consumer credit requirements by lending agencies. Indeed, the consumer’s net wealth position has been eroded so deeply by falling real estate and stock portfolio values that spending on items such as energy-efficient lighting equipment like CFLs has declined due to its higher first-cost price relative to traditional options.
Cracks are also beginning to appear in the nonresidential lighting market. Overall construction of new income properties (lodging, office, retail, etc) fell slightly for the second consecutive quarter, but declines are only expected to accelerate. Corporate profits peaked more than two years ago and remain under serious pressure. In addition, given the great difficulty many firms have had in accessing capital markets, these factors have forced companies into laying off massive numbers of workers, paring back (or completely delaying) investment plans and/or even entering bankruptcy protection. As a result, demand for new lighting equipment from the nonresidential market will likely contract in the quarters ahead.
