Global Purchasing Index

By Victoria Fraza Kickham, Editor

A monthly benchmark that gauges purchasing professionals’ views on procurement activity in the electronic components marketplace. A reading below 100 indicates pessimism; a reading above 100 indicates optimism.

Buyers Gain Confidence in 2016

Economic optimism among buyers of electronic components jumps 3.4% as the New Year gets underway, with buyers pointing to a strong start in January.

Economic optimism among buyers of electronic components improved in January, as purchasing managers cited better business conditions at the start of the year. Global Purchasing’s Global Purchasing Index jumped 3.4% to a reading of 115.4 in January, indicating increased optimism among buyers of a wide range of electronic components.

“After a less-than-stellar 2015, we are finding 2016 to be off to a great start, with new business and new customers,” said one GPI panel member who is a buyer at a contract manufacturing firm.

“We, as a company, seem to be busy,” said another panel member.

Buyers cited increased purchasing activity during the month, along with higher inventories, lower prices, and increasing lead times for some of the components they purchase. New order activity increased slightly during the month.

Orders, Purchases, Inventories all up

Global Purchasing’s New Orders Index inched up slightly during the month, indicating that most buyers are seeing increased ordering activity in their customer base. Buyers also reported having more inventory on hand, as the Inventories Index increased 6%. Looking at their own purchasing activity, buyers indicated an increase in their purchases of electronic components during January as compared to December, as the purchasing index rose 5%.

Lead times also extended during the month, as the Lead Times Index increased 2%. GPI panel members said prices fell in January, as the prices index slipped 2%.

The January GPI reading is the highest since September 2015, when the index registered 123.7. It falls short of the year-ago period, however. The GPI remained above 117 for the first three months of 2015, reaching the year’s high in March, at a reading of 124.4. Since its inception in January 2014, the Global Purchasing Index has remained above the 100-point mark indicating economic optimism among purchasing professionals, with the exception of December 2014, when it dipped to 99.

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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