Electronics Industry Sentiment Rises in March

Estimated reading time: 1 minute

Sentiment among electronics manufacturers remains positive, with demand reaching the highest level in a year, according to IPC’s March Sentiment of the Global Electronics Manufacturing Supply Chain Report.

When asked about how the current interest rate environment impacts their businesses, firms that rely on borrowed capital indicated they are seeing an impact on material costs, inventories, and orders as a result of higher interest rates, which then filters down to reduced CAPEX spend and ability to grow and invest in other areas of the business.  Among firms operating in markets outside of the United States exchange rates can also be negatively impacted by higher U.S. interest rates. 

In regards to outlook for next six months, electronics manufacturers expect labor costs to come down slightly, with material costs holding steady.  While profit margins and backlogs are expected to improve, ease of recruitment is likely to remain challenging.  

Additional survey data show:

• Cost pressures remain consistent: The Material Cost Index rose three points, but was offset by a three-point decline in the Labor Costs Index.
• The New Orders Index rose to the highest level since July 2022.
• Industry Outlook improves: The Demand Outlook Index approached an all-time high while the outlook for Profit Margin also hit an all-time high.
• Orders, shipments and capacity utilization are all expected to rise significantly in the near-term.

These results are based upon the findings of IPC’s Current State of Electronics Manufacturing Survey, fielded between February 14 and February 29, 2024.

Read the full report here.