Industry Continues to Face High Costs; Data Suggests Mixed Cost Pressures

According to IPC’s November Sentiment of the Global Electronics Manufacturing Supply Chain report, 80% of electronics manufacturers are experiencing rising material costs, while 77% indicate that labor costs are on the rise. At the same time, ease of recruitment, profit margins, and inventory from suppliers are presently declining.

“Over the next six months, manufacturers expect to see increases in both labor and material costs, although somewhat to a lesser extent,” said Shawn DuBravac, IPC chief economist. “While supplier inventory is expected to improve, ease of recruiting and finding skilled talent and profit margins are likely to remain challenging.”

Despite murky global manufacturing sentiment, the manufacturing sector continues to hold up well, according to IPC’s November Economic Outlook report. The slowdown has brought demand and production back into balance and enabled many manufacturers to focus on backlogs.

“Though we have seen some growth, we continue to remain somewhat cautious about the economic outlook,” added DuBravac. “Consumers continue to shift away from purchasing durable goods and return to services, and this trend is likely to continue.”

Additional data from the November economic outlook report shows that there continues to be significant economic uncertainty and this will continue to exert downward pressure on economic activity of both consumers and businesses. The ongoing slowdown will continue in the coming quarters. “We are looking closely at any change in the rate of that slowdown,” DuBravac added.    

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