August 2019

North American Electronics Industry’s Slowing Growth Likely to Continue, Leading Indicators Suggest

North American electronics industry growth has been slowing since the beginning of this year but most supplier segments’ sales growth through June 2019 remained positive. Growth in June slowed markedly for printed circuit board (PCB) fabricators. Although growth strengthened a bit in June for electronics manufacturing services (EMS) companies, their growth has been slowing gradually and remains modest. Semiconductor sales continued its downward trend deep in negative territory but the downward slope has eased in recent months, indicating a possible turnaround later this year. These year-over-year growth rates reflect three-month rolling averages.

The leading indicators remained positive in June 2019 but they too are softening. The U.S. Purchasing Managers’ Index (PMI), which tends to lead industry sales by two to six months, continued to trend downward but remains positive (above 50). The 3/12 rate of change for U.S. new orders for electronic products, which leads industry sales by one to three months, also weakened slightly but remains in positive territory.

Another leading indicator is IPC’s PCB book-to-bill ratio. It is based on three-month rolling averages of orders and sales, and normally leads industry sales by three to nine months. The book-to-bill ratio was at parity (1.00) in June. The North American PCB industry’s growth rates for both sales and orders have been slowing this year. Because orders have slowed more than sales, the book-to-bill ratio has decreased. A ratio at parity suggests that flat growth may be on the horizon. Ratios above parity indicate greater demand than supply, which may be a precursor of sales growth for electronics manufacturers, while ratios below parity indicate the reverse. Following some volatility last winter, the PCB book-to-bill ratio has been trending downward since March.

These indicators suggest the likelihood of slowing sales growth for the EMS and PCB segments of the industry in the coming months.


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Notes:

  1. This information is provided by IPC International, Inc. 
  2. Other industry data can be found at www.ipc.org.
  3. Three-month rolling averages smooth out some of the volatility in monthly data to show clearer trends.
  4. The U.S. Department of Commerce revised its historical data on U.S. new orders for computers and electronic products, as of May 16, 2019. This graph reflects the revised data.
  5. The June 2019 EMS 3/12 rate-of-change is preliminary as of August 15, 2019.

Sources: IPC statistical programs for the EMS and PCB industries; SIA for semiconductor data; U.S. Census Bureau for U.S. new orders for computer and electronic products; and Institute for Supply Management for the U.S. Purchasing Managers’ Index.

Market Research Reports

World Market Size Estimates

  Billions of U.S. Dollars For Year Source
Printed Circuit Boards (PCBs) $62.4 2018 Prismark Partners
Electronics Manufacturing Services (EMS and ODM) $542 2018 New Venture Research
Electronic Equipment (Including Components) $1,892 2018 Reed Electronics Research

Note: Changes in currency exchange rates affect these dollar amounts from year to year.

Lead-Free Trends

Source: IPC Global Solder Statistical Program and Global Solder Market Report

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