Eddy-current (EC) sensors are widely used in the industry for nondestructive evaluation (NDE) and structural health monitoring (SHM). It has this wide acceptance mainly because it has high tolerance to harsh environments, low cost, and high bandwidth. Its variant pulsed eddy current (PEC) provides even more depth information of test materials, which can be applied in liftoff measurement (displacement and coating thickness measurement), defect measurement, and material characterization. However, PEC sensors are prone to measurement errors due to a phenomenon called electrical runout (ERO), which is attributed to the inhomogeneity of the test material. The main thrust of this paper is to investigate, therefore, the contributions of the electromagnetic properties (permeability and conductivity) of the sample to ERO with a view to separate the influence of these two properties. Both time-domain and frequency-domain analyses are carried out in this investigation viz-a-viz: transient response, differential normalized response, magnitude spectrum, and normalized magnitude spectrum. This paper reveals that conductivity effects are prominent in the rising edge of the transient response, hence, changing the spectral pattern in the frequency domain while permeability effects dominate in the stable phase of the transient response, thus this effect can be suppressed or reduced by normalization showing that it is only an amplitude change.