After slipping below the 100-point mark indicating business optimism in December, the Global Purchasing Index surged 19% to a reading of 118 in January as buyers of electronic components reported better business conditions at the start of 2015.
Though GPI panel members reported a 3% drop in new orders from customers during the month, they said they expect orders to pick up later in the first quarter and in the second quarter of the year. They also reported an increase in their purchasing activity along with an increase in their electronic component inventories. The prices index increased during the month as well, and buyers reported longer lead times for many of the components they purchase.
Overall, the outlook is positive.
“Bookings are way up for January, with scheduled orders also being booked for Q1 and Q2,” one panel member said. “Optimism is the highest it has been in several years. We are hiring new personnel and looking forward to 2015.”
Inventories, Purchases, Prices All Up
Buyers on the GPI panel reported higher inventories of electronic components in January, as the inventories index rose 16% to 2.16. The inventories index had surged in October and remained steady in November before dropping 17% in December.
Purchasing activity increased 19% to reading of 2.16 in January, indicating that buyers are purchasing more electronic components from their suppliers. This follows a decline in the new purchases index in both November and December. Purchasing activity had remained steady throughout the summer months.
GPI panelists reported an 8% increase in the prices index. With the exception of a slight increase in November, the GPI prices index had been declining through the fall, indicating that buyers were paying lower prices for their component purchases.
New Orders Down, Lead Times Lengthen
The GPI new orders index fell 3%, continuing a downward trend that began in November. Buyers on the GPI panel also reported a general lengthening of lead times during the month, as the lead times index increased 9% to 2.16. This continues a trend that began in early fall—with December’s 9% decrease in the lead times index serving as the largest drop since July.
Global Purchasing’s GPI measures purchasing professionals’ business confidence in five areas: new orders from customers; electronic component inventory levels; purchasing activity; pricing; and lead times. Global Purchasing compiles the GPI data monthly from a survey of more than 100 panel members who buy a wide range of electronic components. Prequalified for their industry experience, panel members are purchasing executives, managers, or buyers at original equipment manufacturing (OEM) or contract manufacturing firms around the world.