Purchasing Confidence Surges in September

Purchasing Confidence Surges in September

More buyers are optimistic has they head into fall, predicting an upswing in fourth-quarter business activity.

More buyers of electronic components expressed a positive outlook on the economy in September, as the Global Purchasing Index surged more than 8% to a reading of 124. The GPI has remained above the 100-point mark indicating economic optimism all year, but the September reading sets an all-time record for the index, which launched in January 2014.

“Shipments are still below where we want them, but good activity is happening, so the market should pick up for Q4 shipments,” said one GPI panelist.

Others cautioned that the increased activity indicates a seasonal norm for their companies and may not indicate overall business improvement.

“Increased Q4 order activity is fairly common at our company, and not an indication of improved business conditions overall,” said another panel member. “We’re most grateful for the increased activity, but don’t want to [indicate that] our business is moving up. It’s been a challenging year.”

Business optimism among buyers had slowed in the spring and crept up over the summer before the September surge. Four of the GPI’s indexes increased during September, with the new purchases index seeing the most growth, rising eight percentage points and indicating that buyers are making more electronic components purchases from their suppliers. The prices index rose five percentage points, indicating that some buyers are paying higher prices for electronic components.

The new orders index rose four percentage points, indicating many buyers are receiving more orders from their customers; the electronic components inventories index also rose four percentage points, indicating that companies have more inventory on hand. Buyers said lead times for most components remained stable during the month.

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.

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