The forecast for U.S. economic growth, initially expected to be 0.5 percent at the beginning of 2023, is now expected to grow by 2 percent. While the U.S. economy has surpassed expectations, the Federal Reserve has raised rates significantly over the last year, signaling tremendous headwinds as those rates take effect. In Europe, growth in the Eurozone expanded by 0.3 percent compared to the previous quarter, marking the most substantial growth since the second quarter of 2022, according to IPC’s August 2023 Economic Outlook report.

According to Shawn DuBravac, IPC chief economist, “The coming months will be crucial in determining the trajectory of the U.S. economy, with a keen eye on the Federal Reserve’s strategies to balance growth and inflation concerns.”

Additional data in the August IPC Economic Outlook show:

• In the U.S., infrastructure investments are poised to give a boost to the construction sector, potentially offsetting some of the slowdown in other areas of the economy.
• The U.S. manufacturing sector recorded a strong month, reporting output gains rose 0.5 percent in July, the first gain in three months. Auto and non-auto manufacturing both posted increases, rising 5.2 percent and 0.1 percent, respectively.
• The U.S. New Orders Index suggests orders remain soft, but manufacturers appear to be managing slower orders well.
• In Europe, the economies of France and Spain demonstrated positive growth, spurred by a surge in exports in France and a rebound in domestic demand in Spain.
• In the second quarter of 2023, employment rose by 0.2 percent in both the Eurozone and the EU. During the first quarter of 2023, both regions witnessed a more substantial increase in employment, with a growth rate of 0.5 percent.

View August 2023 IPC Economic Outlook. For more information on IPC’s industry intelligence program including current research and reports, visit www.ipc.org/advocacy/industry-intelligence.

Though cost pressures continue to impact the electronics industry, product demand and inventories remain positive, leading to a healthy supply chain per IPC’s August 2023 Global Sentiment of the Electronics Supply Chain Report.

“Over the next six months, electronics manufacturers expect to see continued increase in both labor and material costs, although to a lesser extent than current conditions,” said Shawn DuBravac IPC chief economist. “Conversely, while backlogs and profit margins are expected to improve, ease of recruitment is likely to remain challenging.”

Additional survey data show:

• The Labor Costs Index rose four points in August. The index remains extremely elevated. The electronics industry has yet to see a break in the trend of raising labor costs.
• The Material Costs Index rose five points in August. This is the first monthly increase since October 2022. Future months will help determine if this rise was driven by data volatility or a more meaningful trend.
• The Shipment Index rose solidly in August and remains in expansionary territory. The Orders Index rose one point and also remains in expansionary territory.
• The Backlog Index rose in August but remains in contraction territory, though just barely. New orders and shipments seem well balanced in the electronics industry right now which has likely weakened backlogs.      

For the report, IPC surveyed hundreds of companies from around the world, including a wide range of company sizes representing the full electronics manufacturing value chain. View full report.

IPC announced today the July 2023 findings from its North American Printed Circuit Board (PCB) Statistical Program. The book-to-bill ratio stands at 1.01.

Total North American PCB shipments in July 2023 were up 23 percent compared to the same month last year. Compared to the preceding month, July shipments were up 10.2 percent.

PCB bookings in July were up 24.6 percent compared to the same month last year. July bookings were up 7.8 percent compared to the preceding month.

“July was a good month for the PCB sector. Orders were the strongest in 10 months and shipments were the strongest in four months,” said Shawn DuBravac, IPC’s chief economist. “The year-to-date trend for orders has steadily been improving, but the trend of lower orders in 2023 remains in place.”

Detailed Data Available

Companies that participate in IPC’s North American PCB Statistical Program have access to detailed findings on rigid PCB and flexible circuit sales and orders, including separate rigid and flex book-to-bill ratios, growth trends by product types and company size tiers, demand for prototypes, sales growth to military and medical markets, and other timely data.

Interpreting the Data

The book-to-bill ratios are calculated by dividing the value of orders booked over the past three months by the value of sales billed during the same period from companies in IPC’s survey sample. A ratio of more than 1.00 suggests that current demand is ahead of supply, which is a positive indicator for sales growth over the next three to twelve months. A ratio of less than 1.00 indicates the reverse.

Year-on-year and year-to-date growth rates provide the most meaningful view of industry growth. Month-to-month comparisons should be made with caution as they reflect seasonal effects and short-term volatility. Because bookings tend to be more volatile than shipments, changes in the book-to-bill ratios from month to month might not be significant unless a trend of more than three consecutive months is apparent. It is also important to consider changes in both bookings and shipments to understand what is driving changes in the book-to-bill ratio.

IPC’s monthly PCB industry statistics are based on data provided by a representative sample of both rigid PCB and flexible circuit manufacturers selling in the USA and Canada. IPC publishes the PCB book-to-bill ratio by the end of each month.

IPC announced today the July 2023 findings from its North American Electronics Manufacturing Services (EMS) Statistical Program. The book-to-bill ratio stands at 1.27.

Total North American EMS shipments in July 2023 were up 3.4 percent compared to the same month last year. Compared to the preceding month, June shipments decreased 0.7 percent.

EMS bookings in June decreased 3.5 percent year-over-year and increased 2.1 percent from the previous month.

“The North American EMS industry saw minimal change in July. The year-to-date trend of weaker orders and stronger shipments remains intact,” said Shawn DuBravac, IPC’s chief economist.

Detailed Data Available

Companies that participate in IPC’s North American EMS Statistical Program have access to detailed findings on EMS sales growth by type of production and company size tier, order growth and backlogs by company size tier, vertical market growth, the EMS book-to-bill ratio, 3-month and 12-month sales outlooks, and other timely data.

Interpreting the Data

The book-to-bill ratios are calculated by dividing the value of orders booked over the past three months by the value of sales billed during the same period from companies in IPC’s survey sample. A ratio of more than 1.00 suggests that current demand is ahead of supply, which is a positive indicator for sales growth over the next three to twelve months. A ratio of less than 1.00 indicates the reverse.

Year-on-year and year-to-date growth rates provide the most meaningful view of industry growth. Month-to-month comparisons should be made with caution as they reflect seasonal effects and short-term volatility. Because bookings tend to be more volatile than shipments, changes in the book-to-bill ratios from month to month might not be significant unless a trend of more than three consecutive months is apparent. It is also important to consider changes in both bookings and shipments to understand what is driving changes in the book-to-bill ratio.

IPC’s monthly EMS industry statistics are based on data provided by a representative sample of assembly equipment manufacturers selling in the USA and Canada. IPC publishes the EMS book-to-bill ratio by the end of each month.