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Supply chain pressures hit growth says IPC

Market news |
By Nick Flaherty

Rising material and labour costs are hitting global production of electronics, says the latest report by US market research firm IPC.

The August Global Sentiment of the Electronics Supply Chain Report survey by IPC shows that current conditions for the electronics supply chain remain challenging, with 86 percent of electronics manufacturers experiencing rising material costs, while 76 percent say labour costs are increasing. Supporting data from it’s August Economic Report indicate a slowing economy, with an ongoing debate among experts about the possibility of a recession.                                          

“Industrial production rose at a healthy 6.2 percent annualized rate in the second quarter, strongly suggesting that the economy is not in a recession. At least not yet,” said Shawn DuBravac, IPC chief economist. “On net, the global economic picture looks worse than it did a month ago, despite some positive developments,” said DuBravac. “We have subsequently lowered our projections for economic growth in the regions we cover.”                                                            

Other forces exerting pressure on the economy are the weakening of demands for new orders and increasing energy and food prices.

Supply chain constraints continue to ease, with most companies seeing an expansion in available inventories for the first time in five months but companies expect to continue to have difficulty finding skilled labour. This is hitting profit margins, although demand remains strong.

In Europe 96% of respondents saw material costs rising, compared to 48% in Asia, with 76% seeing higher labour costs and 52% seeing more problems with recruitment. These factors are set to fall slightly in the next six month, with 94% seeing a rise in material costs and 71% with labour costs

www.ipc.org

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