Summer slowdown hits
Staff -- Purchasing, 9/16/2004 2:00:00 AM
It looks like the dog days of summer hit the electronics industry in August. PURCHASING magazine's monthly survey of business conditions found a slowdown in business activity last month.
The sluggishness apparently carried over from the second quarter when inventories increased after some buyers canceled orders for parts.
Analysts believe business will pick up late in the third quarter and build in the fourth. Shipments of consumer electronics equipment, cell phones and computers are expected to drive the component industry later in the third and fourth quarters.
In August, PURCHASING magazine's Business Activity Index for electronics-consuming companies fell from 66 to 52.8. Only 37% of electronics buyers reported that business was up over the previous month compared to 53% in July.
Despite the August decline in business activity, buyers were still optimistic that purchase orders would increase over the next 90 days. The forward demand indicator, a measure of purchase orders over the next quarter, was 69.2 in August, down just slightly from 72 in July.
While business activity was slowing, buyers reported that prices increased. Sixty percent said tags rose in August, compared to 58% in July.
Because of an inventory buildup due to weak demand, buyers said they were reducing their stockpiles.
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