Business improves

Staff -- Purchasing, 11/17/2005

Business picked up in October as companies built equipment for the upcoming holiday selling season, according to PURCHASING magazine's monthly survey of electronics business conditions.

The business activity index registered 72.3 on October, up from 66.1 in September. Anytime the index is above 50, it means business is improving. Fifty-eight percent of electronics buyers say business improved in October from September, while 14% said it declined. Twenty-eight percent said business was the same as September.

Buyers think that business will stay strong for awhile. The forward demand index increased to 72.3 in October from 61.6 in September. That means more buyers expect to increase their purchase orders over the next 90 days.

Although business is improving, semiconductor demand is not increasing that much. Only 20% of buyers said they will increase chip orders over the next 30 days. Fifty percent said their semiconductor orders would be the same in October as they were in September.

Semiconductor prices appear to be mostly flat. Sixty-three percent of buyers surveyed said prices were the same in October as they were in September, while 10% said that prices declined.

Few buyers say inventories are increasing. Only 22% of buyers said they were increasing component stockpiles in October, up slightly from 19% in September. Forty-six percent said they would maintain their current inventory levels. The overall inventory index in October was 44.9. When the index is below 50, inventory levels are being reduced.