A GPI reading above 100 indicates optimism among buyers at original equipment manufacturing and contract manufacturing firms. Confidence levels had been above 115 since June of this year and hit their peak in March, at a reading of 124.4; September’s reading of 123.7 marked the second-highest level this year.
Four of the five GPI indexes declined in October, with the inventories index slipping the most. The inventories index dipped below 2 for the first time since May, indicating that buyers have less inventory on hand. In addition, some buyers reported experiencing longer lead times for some components, despite an overall decline in the lead times index.
“Lead-times seem to be a little longer, but pricing is steady,” one GPI panel member reported in October. “Orders are slightly higher.”
Overall, GPI’s New Orders Index fell 9%, the Inventories Index fell 12%, the New Purchases Index remained flat, the Prices Index fell 8%, and the Lead Times index fell 7%.
October’s lower overall GPI is also about a 13% drop compared to the same period a year ago, when buyers reported a confidence level of 122.8. Global Purchasing’s GPI has dropped below the 100-point mark indicating business optimism one time since its launch in January 2014; it hit 99 in December of 2014.
The monthly Global Purchasing Index measures optimism among buyers at original equipment manufacturing (OEM), contract manufacturing (CM), and electronics manufacturing services providers (EMS). A reading above 100 indicates optimism, and a reading below 100 indicates pessimism. The GPI measures business activity in five areas: new orders, inventory levels, electronic component purchases, prices, and lead times.