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Buyers Maintain Economic Optimism into the New Year

Confidence among purchasing managers improved in December, as buyers cited an increase in new orders from customers alongside shorter lead times and higher pricing for components.

Buyers of electronic components reported continued economic optimism in December, as the Global Purchasing Index increased 0.7% to a reading of 111.7. Most buyers surveyed reported an increase in new orders from customers, shorter lead times for electronic components, and said they paid higher prices for the components they purchased during the month. They also said their inventories increased during the month and that they made fewer purchases compared to November.

“December bookings [were] definitely up,” said one GPI panel member, while another added that the month was a positive sign for the New Year: “It’s a good start to 2016.”

Global Purchasing’s monthly index measures economic optimism among buyers of electronic components. A reading above 100 indicates a positive outlook, and a reading below 100 indicates a negative outlook. This marks the second December reading since the index launched in 2014, and it stands in stark contrast to the year-earlier month. In December 2014, the GPI dipped below the 100-point mark for the first and only time in the index’s history, making this December’s 111.7 reading a welcome end to the year.

“[We saw a] nice little boost for December,” another panelist said.

For December, the GPI new orders index increased 5.4%, indicating that buyers are receiving more new orders from customers. The inventories index increased 5.5%, indicating buyers have more inventory on hand, and the prices index inches up 1.4%, indicating higher prices for some of the components buyers are sourcing. The purchasing index fell 3.3%, indicating a decrease in purchasing activity during the month. The biggest change was in the lead times index, which fell 6.6%, indicating that buyers are experiencing shorter lead times for many of the components they are ordering.

The monthly Global Purchasing Index measures optimism among buyers at original equipment manufacturing (OEM), contract manufacturing (CM), and electronics manufacturing services providers (EMS). The GPI measures business activity in five areas: new orders, inventory levels, electronic component purchases, prices, and lead times.

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