Sourcetoday 507 Gp Index August 1

Purchasing Pros Optimistic as Summer Ends

Sept. 9, 2015
Global Purchasing Index slows in August, but remains in positive territory as buyers cite steady business conditions and point to expected growth in new orders over the coming weeks.

Buyers in the electronics supply chain remained upbeat in August, as the Global Purchasing Index registered 114.05, a 0.4% drop compared to revised figures for July, but still above the 100-point mark indicating economic optimism. Buyers cited steady business activity across the board, with some saying they anticipate growth in new orders in September.

“China has slowed a bit and [is] offering more aggressive pricing and very competitive lead-times,” said one GPI panelist. “We believe order activity will pick up in the coming weeks.”

The new orders index registered 2.11 for the month, indicating steady conditions with little change compared to July.

“We continue to get new orders from our customers, and new quotes from potential customers are many,” another panelist commented. “It appears the market is continuing to improve. At least from a buyers view.”

Others cited general growth, with the exception of oil industry customers, and pointed to steady growth through the typically slower summer months.

The GPI inventories index registered 2.08, also indicating that buyers are seeing similar inventory levels to previous months. The electronic components purchases index rose to 2.05 from a reading of 1.97 in July, indicating that purchasing activity leveled off after falling slightly in July. The prices and lead times indexes remained relatively stable, with the prices index registering 2.16, down 0.04% compared to July, and the lead times index registering 2.3, up 0.03% compared to July. Readings in the 2% range generally indicate stable conditions.

The GPI for July was revised down to 114.52, a drop of more than 1% compared to June.

The August GPI report came on the heels of similar news from the Institute for Supply Management, which released its Report on Business September 1. ISM reported that its Purchasing Managers Index registered 51.1% in August, a decline of 1.6% compared to July, but still above the 50-point mark indicated growth in the manufacturing economy. This marked the 32nd straight month of growth in the manufacturing sector and the 75th consecutive month of growth in the overall economy, ISM reported.

ISM pointed to growth in new orders, production, and employment along with a slowdown in supplier deliveries and contracting inventory levels.

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.

Other areas of the GPI you may be interested in:About the GPI | GPI Panelists | Apply to the GPI | Member of the Month | Article Library

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About the Author

Victoria Fraza Kickham | Distribution Editor

Victoria Kickham is the distribution editor for Electronic Design magazine, SourceESB and, where she covers issues related to the electronics supply chain. Victoria started out as a general assignment reporter for several Boston-area newspapers before joining Industrial Distribution magazine, where she spent 14 years covering industrial markets. She served as ID’s managing editor from 2000 to 2010. Victoria has a bachelor’s degree in English from the University of New Hampshire and a master’s degree in English from Northeastern University.