Q1 T&D Market Index continues to fall.(NOTES)

Reflecting continued economic distress, Denali Intelligence's T&D Market Index decreased 5.5 percent in the first quarter of 2009 (see Figure 1). Leading the downward pull were underlying commodities, including a 26 percent decrease in crude oil and continued sharp decreases across all base metals. Energy costs posted declines, and diesel fuel prices fell 26 percent in Q1. Metal and energy prices have retreated on eroding demand, both domestic and international. A slow U.S. economy and production cuts in China continued to drive market softness in all base metals, with aluminum seeing the sharpest declines (see Figure 2).

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The overall unemployment rate reached 8.5 percent in March, up markedly from 7.2 percent in December 2008. Though more stable than at year-end, the financial markets continue to be questionable, which exacerbates recessionary forces. In turn, these market forces place even more emphasis on corporate cost restraint.

Looking to 2009, Denali Intelligence expects the T&D Market Index to reflect continued price flattening overall for materials and a slight rise for services as a result of increased heavy construction (see Figure 3) in response to economic stimulus measures, with an overall decrease of 4 percent on the year.

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MARKET FORECAST