Business picks up

Staff -- Purchasing, 8/11/2005

Electronics buyers say business is building and they plan to place more purchase orders over the next 90 days. Sixty percent of buyers said they plan to increase their purchase orders over the next three months, according to PURCHASING magazine's monthly business survey. In June, 53% said orders would increase.

Sixty percent of buyers also said business was improving in July, up from 56% in June. While the business activity index dropped a few points to 70, anytime the index is above 50, it means business is getting better.

Another sign of improving business conditions are inventory levels.

While inventory levels are low, in July 38% of buyers said they were increasing stockpiles. That's up from 19% in June. The inventory index in July was 56.9, the first time it registered above 50 this year.

Prices appeared to be a mixed bag in July. Thirty-four percent said tags were rising while 21% said they were falling and 45% said they were the same as June. For the most part, buyers can expect prices to stay stable or fall as suppliers compete for market share.

Component availability from suppliers appears to be tightening, at least in the short term. Thirty-eight percent said part availability was tightening, compared to 28% in June. However, availability will not be an issue long-term. Many semiconductor fabs have utilization rates in the 80-90% range.