Electronics Industry Continues to Show Resiliency Despite Rising Labor, Material Costs

Some 75% of electronics manufacturers are experiencing rising material costs, while 74% indicate that labor costs are on the rise, according to IPC’s January Sentiment of the Global Electronics Manufacturing Supply Chain report. At the same time, profit margins, inventory from suppliers, and ease of recruitment are presently declining, though ease of recruitment is rising at a faster pace in APAC and Europe than in North America.

With potential risks on the horizon including the threat of weak product demand leading to undesirably high levels of inventory, overall industry sentiment shows surprising resiliency per the January report.

In IPC’s January Economic Outlook report, IPC’s Chief Economist Shawn DuBravac forecasts a looming recession in both the United States. and throughout Europe, but timing is still uncertain. On the positive news front, both the United States and Europe reported better economic growth during Q4 2022 than had been expected, but both economies are slowing.

“In the last month, we have marginally raised our forecasts for economic growth for both the U.S. and Europe but our expectations remain muted,” said DuBravac. “We expect the U.S. economy to grow 0.5 percent in 2023 (up from 0.3 percent last month) and we expect Europe will decline 0.1 percent in 2023, up from last month’s forecast of a 0.3 percent decline. The loosening of strict COVID restrictions in China will also add growth there and we now expect China’s economy to expand 4.7 percent in 2023.”