Electronics recovery builds
Staff -- Purchasing, 2/19/2004 2:00:00 AM
Electronics buyers responding to January's survey of business conditions seem to think that the recovery that began in the fourth quarter is here to stay.
Virtually all of the indicators from PURCHASING's Electronic Survey point to a sustained recovery. For the seventh straight month, PURCHASING magazine's forward demand indicator, a measure of buyers' future purchase order expectations, registered over 70 (on an index where 50 separates expansion from contraction). In January the indicator came in at 85.6, meaning buyers expect business to pick up dramatically in the second quarter. Seventy-eight percent of buyers said they expect to increase their purchase orders over the next 90 days.
The overall business activity index increased to 71.7 in January, up from 68.8 in December. The index was in the 50s for most of 2003.
With business improving, buyers expect prices will increase as demand builds and supply tightens. Almost one third of buyers say they expect semiconductor prices to increase in the next 90 days. Six months ago only 11% said they expect chip tags to rise.
About 30% of buyers say they expect to build inventory levels. In September only 11% said they would increase stockpiles.
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