ECIA reported that the October Electronic Components Sales Confidence Survey continued a trend that began in March 2023 – lower than expected. The July, August, and September surveys showed overall component sales sentiment scores for the month ahead ranging from 94.0 to 94.8. Actual results were between 86.7 and 90.3
In addition, Sales Confidence averaged 5.9 points below expectations for August, September and October. The good news is that the October Sales Confidence Index improved 2.1 points from September to 88.8. However, this is still well below the 100-point threshold that indicates positive monthly sales growth.
Despite the disappointing historical data, the survey suggests that the economy will improve sharply in November, which will push the overall sub-index above 100.
Leading the way was the semiconductor category, with a November outlook of 111.1. The average outlook for the major semiconductor subcategories was more conservative at 99.3. Optimism was broadly based in November, with outlooks of 95.0 for the passive and 95.1 for the electromechanical categories. almost as optimistic as the semiconductor forecasts for improvement, the overall end-market score jumped 18.1 points to 96.9 in November. This would be the strongest result since June 2022 if the combined outlook for all major segments materializes in November.
The electronic components industry continues to be projected to stand on the brink of exceeding the break-even point by the end of the year, and is likely to return to broad-based growth in early 2024.
The sales confidence gap between upstream manufacturer representatives and downstream manufacturers and distributors widened significantly in the October survey. This significant disconnect began in April, widened in June and July, and narrowed in August and September. From September to October, the average confidence index for manufacturing representatives fell by nearly 10 points.
Meanwhile, the overall scores for distributors and manufacturers remained relatively stable from month to month. When downstream manufacturer representatives are on the front lines of the supply chain, they seem to see a more challenging sales environment than their supply chain partners.
The overall End Market Index gave back all of September’s gains, falling 12.6 points to 78.8 in October. This is a significant departure from October’s product index trend. However, the End Market Index is also expected to rebound strongly in November, rising 18.1 points to 96.9. Industrial Electronics is the most volatile segment of the End Market, with the Index dropping sharply in October to 84.4, but it is expected to jump to 100.0 in November. avionics/military/space continues to outperform all other segments, while cellular phones struggled to the bottom. All end-market categories are expected to show strong growth in November, with the exception of medical electronics, which declined slightly, and automotive electronics and avionics/military/space, which have a flat outlook.
The outlook for product lead time trends has been very healthy. Stable lead times continue to dominate, with average lead times stabilizing at 69% in October. In October, average lead time reports increased between 2% and 4%. Resistors, NAND flash, MPUs, and MCUs received zero reports for extended lead times. Once again, lead time results provided some of the most positive results in the ECST survey.
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