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Orders encounter lull

Staff -- Purchasing, 11/21/2002

PURCHASING's Business Activity Index for electronics-consuming companies fell back to earth in October as the percentage of electronics buyers reporting lower new orders rates for the month matched the percentage reporting stronger bookings. On the positive side, some buyers report seasonal (pre-holiday) surges in order rates at their companies. Companies supplying the U.S. military, automotive, noncommercial aerospace, and medical equipment sectors most frequently report growth in October. Ditto for original equipment makers (OEMs) that have large aftermarket supply businesses (since more companies are now repairing rather than replacing capital equipment). On the negative side, telecommunications, consumer electronics and semiconductors are persistent weak spots on the high-tech business scene. Greatest numbers of supply-related complaints come from buyers working for high-tech businesses that are performing better than average. Suppliers' austerity measures, they say, are making it difficult to source all the parts they need. For example, the procurement manager for a maker of sensors says, "Our suppliers are reducing inventories and we are waiting for parts for which we don't normally wait."

 

Prices

Little hike activity to report

In the electronics sector, buyers report virtually no upward price activity in October. And while most buyers were anticipating stable pricing for November, the percentages of buyers expecting price declines for specific component types outweigh the percentages expecting price increases in nearly all cases. The only exceptions are DRAM 128Mb (16% anticipating price increases vs. 3% expecting declines), analog digital converters (11% increase, 3% decrease) and wirewound resistors (16% vs. 6%).

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