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Sentiment in the electronics industry saw a modest uptick in August, though it remains below the peak observed in April 2024. The improvement was driven by stronger demand and reduced costs according to IPC’s August Sentiment of the Global Electronics Manufacturing Supply Chain Report.
Regarding current supply chain conditions, half (50 percent) of electronics manufacturers are currently experiencing rising labor costs, with 46 percent reporting increased material costs. At the same time, ease of recruitment, profit margins, and backlogs are presently declining. Over the next six months, electronics manufacturers expect labor and material costs to remain high, although relatively stable. Profit margins and backlogs are expected to rise, with recruitment challenges continuing to persist.
In response to special questions on geopolitical risks and trade policies and tariffs affecting business operations, more than two-fifths (42 percent) of respondents are very or extremely concerned about geopolitical risks and 44 percent are concerned with trade policies and tariffs, with no significant differences by geographical regions.
Additional survey data show:
- The Demand Index increased 3.3 percent in August.
- This rise was fueled by better, albeit still contracting, backlog, capacity utilization that shifted to expansion, and heightened order sentiment.
- Cost pressures eased slightly in August, with both the Labor Costs Index and the Material Costs Index dropping by one point.
- Despite this decline, both indexes remain in expansionary territory, indicating that a majority of businesses continue to face cost challenges. Notably, the Labor Costs Index hit a new low for the year.
- Industry outlook Improves in August.
- The overall industry outlook remained robust in August, although demand sentiment has cooled from earlier highs this year.
These results are based upon the findings of IPC’s Current State of Electronics Manufacturing Survey, fielded between July 18 and July 30, 2024. Read the full report.
