North American electronics industry growth has slowed this year but most growth rates remain positive as of October 2019. Printed circuit board (PCB) sales growth strengthened to 3.5 percent compared to the same period last year. Electronics manufacturing services (EMS) growth slowed to 0.8 percent year over year as of October. The steep decline in semiconductor sales continues, but the negative growth rate appears to have bottomed out at -29 percent. These year-over-year growth rates reflect three-month rolling averages.
The leading indicators remain positive as of October 2019. The U.S. Manufacturing Purchasing Managers’ Index (PMI), which tends to lead industry sales by two to six months, has been declining all year but has stayed in positive territory (i.e., above 50) and it strengthen slightly in October. The 3/12 rate of change for U.S. new orders for electronic products, which leads industry sales by one to three months, remains nearly flat at 0.1 percent growth.
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 has strengthened in recent months, reaching 1.11 in October driven by a rebound in orders. Ratios above parity (1.00) indicate greater demand than supply, which may be a precursor of sales growth for electronics manufacturers, while ratios below parity indicate the reverse.
These indicators suggest that sales growth is likely to continue but remain slow in the coming months for the North American EMS and PCB segments of the industry.