Per IPC’s May 2023 Economic Outlook report, the global economy continues to cool, but not quite as severely as expected at the start of the year. Stronger-than-expected growth in 2023 will come at the cost of weaker growth in 2024.

Labor markets remain extremely strong, despite the widely held view that recession is imminent. Both the United States and Europe are enjoying record low levels of unemployment. Strong labor markets and solid wage growth are likely to keep inflationary pressures stubbornly high.

“Consumer confidence fell sharply in the last month, erasing half of the gains since the all-time low levels of June 2022. Business confidence has also been weak. Manufacturers report a subdued outlook in both the U.S. and Europe,” said Shawn DuBravac, IPC chief economist. “Leading economic indicators continue to suggest a high risk of recession this year, even if the timing continues to push later into the year,” DuBravac added.

Additional data in the May 2023 IPC Economic Outlook show:

• U.S. consumer sentiment fell in May, declining nearly 7 percent. The debate over the debt ceiling likely contributed to some of this decline.
• U.S. manufacturing sentiment contracted for the fifth consecutive month in April. The manufacturing PMI rose 0.8 percentage points in the last month, but not enough to move back into expansionary territory.
• The European economy grew during the first quarter of the year, edging up 0.1 percent in the euro area and up 0.2 percent in the EU.
• Electronics manufacturing output fell in March, decreasing a sharp 5.9 percent from the prior month and 1.7 percent from the year-ago period.

View May 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.

Per IPC’s May 2023 Global Sentiment of the Electronics Supply Chain Report, cost pressures continue to recede and demand remains positive for now, leading to a cautiously optimistic global electronics industry sentiment.                                                                                                            

“Geopolitical factors, along with the continued impacts of inflation and rising interest rates, have led manufacturers to describe the current economy as slow, uncertain, challenging, difficult, volatile, and unpredictable,” said Shawn DuBravac, IPC chief economist. “However, despite current conditions, the outlook for 2023 is relatively positive, with manufacturers expressing optimism and expecting growth, especially in the latter half of the year.”

Additional survey results indicate:

• The majority of respondents are still reporting that labor costs and material costs are rising, but the number of companies experiencing rising costs continues to decline. Only 49% of companies believe material costs will rise in the coming months, the first time this has fallen below 50 percent.
• Ease of recruiting skilled workers has also improved to its highest level since the survey began.
•  The Orders Index slipped to 101. This is still in expansionary territory, but it is the lowest level seen since the start of the survey.
• Orders are expected to decline more so for firms operating in North America versus those in Europe, who instead are more likely expecting orders to remain stable.

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 April 2023 findings from its North American Printed Circuit Board (PCB) Statistical Program. The book-to-bill ratio stands at 0.89.

Total North American PCB shipments in April 2023 were up 12.1 percent compared to the same month last year. Compared to the preceding month, April shipments were down 18.4 percent.

PCB bookings in April were down 9.8 percent compared to the same month last year. April bookings were down 0.3 percent compared to the preceding month.

“Weak demand for electronics has kept PCB orders in check,” said Shawn DuBravac, IPC’s chief economist. “Shipments are up over seven percent year to date while orders are down nearly eight percent.”

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 April 2023 findings from its North American Electronics Manufacturing Services (EMS) Statistical Program. The book-to-bill ratio stands at 1.21.

Total North American EMS shipments in April 2023 were up 14.3 percent compared to the same month last year. Compared to the preceding month, April shipments increased 5.5 percent.

EMS bookings in April decreased 6.1 percent year-over-year and decreased 1.2 percent from the previous month.

“EMS orders continue to trend downward,” said Shawn DuBravac, IPC’s chief economist. “April's book-to-bill is the weakest recorded since the start of 2021.”

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.