Economic data over the last month indicates that while inflation remains stubbornly high, economic growth is slowing. The base case scenario for the United States right now suggests a recession in the middle two quarters of the year. The U.S. economy should grow about 1.2 percent this year, but growth in the back half of the year will be weak.

Germany recently raised its economic growth forecast for the year to 0.4 percent, up from the previous 0.2 percent, but the environment in both the United States and Europe remains persistently difficult. It remains uncertain how sharply higher interest rates will fully impact the economy.

“Supply constraints are easing everywhere which on the surface looks like a good thing. But it likely also means that backlogs will wane in the second half of the year. In the absence of new demand, output will likely be weak,” said Shawn DuBravac, IPC chief economist.

Additional data in the April 2023 IPC Economic Outlook show:

• The U.S. economy grew 1.1 percent in the first quarter, coming in below an expected rise of 1.9 percent. However, the headline number masks underlying strength in the economy.
• 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 0.3 percent in the EU. The economy is up 1.3 percent in both areas compared to the first quarter of last year.
• In the EU, manufacturing output in electronics end markets rose in February, increasing 1.3% from the prior month and 2.9% from the year-ago period.

View April 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 April 2023 Global Sentiment of the Electronics Supply Chain Report, last month delivered a mixed bag of industry sentiment: cost pressures are receding; industry demand appears to be slowing; and industry expects growth in some sectors.  

Survey results show:

• 54 percent of respondents reported that labor and material costs are rising, but the number of companies experiencing rising costs continues to decline.
•  The Orders Index slipped to 105. While this is still in expansionary territory, it is the lowest it has been since the start of the survey. 
• Industry believes the military sector will grow 16 percent on average this year, followed by the aerospace sector and the communications sector which are both expected to grow by roughly 11 percent. The medical sector is expected to rise 10 percent.  
• The automotive sector and industrial electronics sector are both expected to rise 5.6 percent. The consumer electronics sector is expected to decline 3 percent and the computer sector is expected to decline 7 percent in 2023.

“Over the next six months, electronics manufacturers expect to see continued increase in both labor and material costs,” said Shawn DuBravac, IPC chief economist. “Meanwhile, backlogs, ease of recruitment, and profit margins are expected to contract."                       

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 March 2023 findings from its North American Printed Circuit Board (PCB) Statistical Program. The book-to-bill ratio stands at 0.91.

Total North American PCB shipments in March 2023 were up 11.6 percent compared to the same month last year. Compared to the preceding month, March shipments were up 30.1 percent.

PCB bookings in March were down 10.5 percent compared to the same month last year. March bookings were up 2.3 percent compared to the preceding month.

“The book-to-bill slipped this month, but this was driven in part by strong shipments,” said Shawn DuBravac, IPC chief economist. “Order flow is holding steady, but at lower levels than a year ago.”  

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.