Sourcetoday 559 Gpi February 2 1

Purchasing Outlook Improves

March 9, 2016
Global Purchasing Index rises 3%, as buyers cite stable purchases of electronic components and a slight increase in new orders from customers.

Global Purchasing Index

By Victoria Fraza Kickham, Distribution 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.

Purchasing Outlook Improves

Global Purchasing Index rises 3%, as buyers cite stable purchases of electronic components and a slight increase in new orders from customers.

Buyers of electronic components maintained their positive outlook on business in early March, citing solid conditions in February and a cautiously optimistic outlook for the remainder of the first quarter. Panel members responding to the most recent Global Purchasing Index survey reported an increase in customer orders during the month and noted that their own electronic components purchasing activity remained stable.

The Global Purchasing Index for February registered 118.8, a 3% increase over January’s reading and its highest level since last September. The GPI New Orders Index increased 7% during the month, indicating that many buyers saw an uptick in customer orders during the month.

Buyers also cited an increase in the prices index, indicating they are paying higher prices for some of the components they purchase. Panelists also reported a decline in the Inventories Index, indicating they have fewer components on hand.

Despite their optimistic outlook for the month, some buyers point to ongoing concerns over customer forecasting.

“Lack of customer forecasting continues to be a problem,” said one panelist. “[The] industry still hasn't learned how electronic component lead times work.”

Buyers cited a slight increase in the lead times index for February, although most indicated stable lead times for many of the components they source. GPI’s Lead Times Index has remained near the mid-point mark in recent months, indicating that lead times have remained largely unchanged for many of the products they source.

The February GPI reading of 188.8 also surpasses the year-ago period, when it registered 117.3 in February 2015. 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.

Global Purchasing’s GPI measures purchasing professionals’ business confidence in five areas: new orders from customers; electronic component inventory levels; purchasing activity; pricing; and lead times. Global Purchasing compiles the GPI data monthly from a survey of more than 100 panel members who buy a wide range of electronic components. Prequalified for their industry experience, panel members are purchasing executives, managers, or buyers at original equipment manufacturing (OEM) or contract manufacturing firms around the world.

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