Demand Remains Positive Among Electronics Manufacturers, Labor Costs Index at Highest Level in Six Months

IPC releases February 2024 Global Sentiment of the Electronics Supply Chain Report

Sentiment among electronics manufacturers remains positive, despite minor setbacks during January, according to IPC’s February Sentiment of the Global Electronics Manufacturing Supply Chain Report.

When asked about expectations for a recession in 2024 and 2025, industry executives believe there is a 39 percent chance of a recession in 2024 and a 34 percent chance in 2025. Notably, manufacturers in Europe report a 2024 recession would most likely begin in Q1 while those in North America believe it would likely begin in Q2.

Sixty-six percent of electronics manufacturers are currently experiencing rising labor costs, while more than 44 percent report rising material costs. At the same time, ease of recruitment, backlogs, and profit margins remain in contractionary territory.

“While the Materials Cost Index fell one point, the Labor Costs Index rose by five,” said Shawn DuBravac, IPC chief economist. “That’s the highest it’s been since August 2023.

"Electronics industry leaders foresee a 39 percent probability of a recession this year, underscoring the critical need for strategic foresight and agility,” added DuBravac. “The geographical nuances in recession expectations between Europe and North America further illustrate the complex global economic interplay affecting the electronics industry."

Additional survey data show:

  • Demand remains in expansionary territory, despite slipping this month and falling one point from 103 to 102.
  • The Capacity Utilization Index fell two points, while the Shipments Index dropped five points. The decline in shipments could be weather-related.
  • The New Orders Index rose three points to 105, the highest level since November 2023.
  • While the current view of demand weakened somewhat, the Outlook for demand improved. The increase was led by strong rises in the Shipments Outlook Index which increased by six points and the Backlogs Outlook Index which rose by five points and moved into expansionary territory.

These results are based upon the findings of IPC’s Current State of Electronics Manufacturing Survey, fielded between January 15 and January 31, 2024.

Read the full report here.