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Happy’s Tech Talk #30: The Analog ComputerElectronics Industry Sentiment Falls in June, Driven by Weaker Demand and Stronger Cost Pressures
July 3, 2024 | IPCEstimated reading time: 1 minute
Sentiment among electronics manufacturers fell in June; despite the decline, sentiment remains above its long-term average according to IPC’s June Sentiment of the Global Electronics Manufacturing Supply Chain Report.
In a special question about the possibility of Chinese manufacturers oversupplying inputs and components including PCBs at artificially low prices over the next year to stimulate its economy, seven in 10 (68 percent) manufacturers expressed “somewhat” or “extreme” concern. A significantly lower level (29%) indicated a lesser level of concern among manufacturers operating in Asia Pacific.
Regarding outlook for the next six months, electronics manufacturers expect both labor and material costs to come down slightly, while material costs are expected to remain relatively stable. Although backlogs and ease of recruitment are likely to remain challenging, manufacturers expect profit margins and capacity utilization to rise.
Additional survey data show:
- Industry demand fell to its lowest level this year.
- Demand fundamentals weakened for the third consecutive month, falling to the lowest level in 2024.
- The Demand Index slipped 3.1percent this month, after falling three percent last month.
- All four components of demand slipped this month. The Shipments Index fell one point, while both the New Orders Index and the Backlog Index dropped two points. The biggest drop came from the Capacity Utilization Index which fell eight points and dropped into contractionary territory.
- Cost pressures rose for a second consecutive month, but after a record low in April.
- The Labor Costs Index dropped two points this month but the Material Costs Index increased six points.
- The Material Costs Index is at its highest level since August 2023.
- Industry outlook declined in June, dropping to the lowest level since October 2024.
- The industry outlook remains strongly positive, though it has slightly softened over the two months from a record high in March.
These results are based upon the findings of IPC’s Current State of Electronics Manufacturing Survey, fielded between May 15 and May 31, 2024.
Read the full report.
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