CEMs suggest we are in a recession
EP&T MagazineElectronics Contract Manufacturing Supply Chain CEM contract manufacturing EMS services
25% of electronics manufacturers report passing on higher costs to customers
New data from electronic industry association IPC show that most electronics manufacturing industry executives see a recession as inevitable.
IPC’s economic report for October found that 27 percent of industry executives believe the economy is already in a recession, 45 percent believe the economy will enter a recession in 2023, and 13 percent believe the economy will enter a recession in the fourth quarter of 2023. Industry executives expecting a recession are bracing for a longer one.
“Tight financial conditions and an uncertain economic outlook are making both businesses and consumers more cautious,” stated Shawn DuBravac, IPC chief economist. “We have reached the end of the post-lockdown rebound.”
Among other conclusions, the IPC survey results show:
- After declining for two consecutive months, the Materials Cost Index rose three points.
- Three-fourths (73 percent) of electronics manufacturers indicate labor costs are on the rise.
- Ease of recruitment, profit margins, and inventory available from suppliers are presently declining.
- Positively, manufacturers expect to see a decline in backlogs over the next six months.
Inflation continues to dominate the narrative, with the U.S. likely past peak inflation, while the situation worsens in Europe. Europe is expected soon to reach peak inflation, and prices continue to rise. Projections for economic growth in Europe in 2023 have been lowered, and now show a decline for the first time for the entire year.
China’s economy remains below the targeted 5.5 percent growth expected for the year, with growth likely to be closer to 3 percent in 2022. The yuan has fallen to its lowest level in 14 years.
IPC surveyed hundreds of companies from around the world, including a wide range of company sizes representing the full electronics manufacturing value chain.