Electronics Industry Sentiment Drops Sharply in September Following Brief August Rebound
Industry sentiment in the electronics sector declined significantly in September due to rising cost concerns and weakening demand according to IPC’s September Sentiment of the Global Electronics Manufacturing Supply Chain Report.
The Demand Index fell by 7.3 percent in September, with all four components of demand decreasing. The Backlog Index, already in contraction, dropped another three points, and Capacity Utilization slipped to neutral. Both the Shipment Index and New Orders Index entered contractionary territory, setting new all-time lows, indicating declining order and shipment volumes for the majority of respondents. While overall industry sentiment cooled from earlier highs, the electronics sector's outlook remained positive.
In response to special questions on the probability of a recession occurring in during the remainder of 2024 and into 2025, a minority of electronics manufacturers still see a recession as possible in 2024, a sentiment that has remained largely unchanged since February. However, manufacturers in the APAC region have grown more pessimistic about the economic outlook.
Additional survey data show:
- Three-fifths (59%) of electronics manufacturers are currently experiencing rising labor costs, with two-fifths (43%) reporting increased material costs. At the same time, profit margins, ease of recruitment, backlogs, shipments, and orders are presently declining.
- Over the next six months, electronics manufacturers expect both labor and material costs to remain high, while ease of recruitment and profit margins are likely to remain challenging.
- Orders, shipments, capacity utilization, backlogs, and profit margins are expected to rise over the next six months, while labor and material costs are expected to decline.
These results are based upon the findings of IPC’s Current State of Electronics Manufacturing Survey, fielded between August 16 and August 31, 2024.
Read the full report.