Outlook influenced by growing recession uncertainties, rising prices and COVID lockdown policies in China
Per IPC’s July Global Sentiment of the Electronics Supply Chain Report, nine in 10 electronics manufacturers surveyed are currently experiencing rising material costs, while four-fifths are experiencing rising labor costs. Eighty percent of respondents reported they have increased pricing due to higher material and labor costs. Supporting data from IPC’s July Economic Report indicate forces exerting pressure on the global economy, and conversely, the electronics manufacturing industry: growing recession uncertainties, higher gasoline and food prices, geopolitical uncertainties, and China COIVD policies and lockdowns exacerbating supply chain disruptions.
“Other risks remain acute,” said Shawn DuBravac, IPC chief economist. “Inflationary pressures remain historically high in many parts of the world. While supply chains appear to be improving, pricing pressure remains stiff. This is hurting profitability for many businesses but also leading both businesses and consumers to hold off purchases in hopes that prices will normalize. Moreover, higher prices for things like gasoline are crowding out other purchases consumers and businesses might make. How these forces will evolve in the coming months adds to the long list of uncertainties around the globe that will continue to dominate the near-term outlook.”
Additional survey results from the global sentiment report indicate:
- Demand remains strong. More than half of survey respondents indicate orders will expand in the next six months
- While some improvements to inventory are expected, ease of recruiting/finding skilled talent are profit margins are likely to remain challenging
- Electronics manufacturers have expressed concern around the future availability of labor, components, materials (especially metals) and semiconductors.
IPC surveyed hundreds of companies from around the world, including a wide range of company sizes representing the full electronics manufacturing value chain.
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