Walt Custer is an industry analyst focused on the global electronics industry. Prior to forming Custer Consulting Group he was Vice President of Marketing and Sales for Morton Electronic Materials, a global supplier of specialty chemicals and process equipment for the PCB industry.
Custer has been a member of the IPC trade organization since 1975 where he received both the President's and the Raymond E. Pritchard Hall of Fame Awards. He is currently a member of the IPC Executive Market & Technology Steering Committee. Custer is also a Director of the EIPC European PCB trade organization.
He authors regular “Market Outlook” columns for Global SMT & Packaging magazine, the Journal of the HKPCA and the TTI MarketEYE website.
Statements of fact and or opinions expressed in MarketEYE by its contributors are the responsibility of the authors alone and do not imply an opinion of the officers or the representatives of TTI, Inc.
The JPMorgan Global Manufacturing PMI rose to 50.8 in December from 49.7 in November (Chart 1).
This global PMI increase was aided by U.S. December expansion.
Economic activity in the U.S. manufacturing sector expanded in December for the 29th consecutive month, and the overall economy grew for the 31st consecutive month, reported the Institute for Supply Management.
The U.S. PMI registered 53.9% (Chart 2), an increase of 1.2 percentage points from November's reading of 52.7%, indicating expansion in the manufacturing sector for the 29th consecutive month.
The New Orders Index increased 0.9 percentage points from November to 57.6%, reflecting the third consecutive month of growth after three months of contraction.
Prices of raw materials continued to decrease for the third consecutive month, with the Prices Index registering 47.5%, which is 2.5 percentage points higher than the November reading of 45%.
Manufacturing is finishing out the year on a positive note, with new orders, production and employment all growing in December at faster rates than in November, and with an optimistic view toward the beginning of 2012 as reflected by the panel in this month's survey according to ISM.
The November domestic “Factory Orders” report was released last week. Here are some key results:
Chart 28 summarizes the annualized (12/12) and 3-month (3/12) growth of the domestic supply chain. The 3/12 “leads” the 12/12.
“Eurozone Crisis and Hard-Disk Drive Shortage Impacting Spending.”
Worldwide IT spending is forecast to total $3.8 trillion in 2012, a 3.7% increase from 2011, according to the latest outlook by Gartner, Inc. In 2011, worldwide IT spending totaled $3.7 trillion, up 6.9% from 2010 levels.
Gartner has revised downward its outlook for 2012 global IT spending from its previous forecast of 4.6% growth. All four major technology sectors computing hardware, enterprise software, IT services and telecommunications equipment and services are expected to experience slower spending growth in 2012 than previously forecast.
"Faltering global economic growth, the Eurozone crisis and the impact of Thailand's floods on hard-disk drive (HDD) production have all taken their toll on the outlook for IT spending," said Richard Gordon, research vice president at Gartner.
The Thailand floods, that left one-third of the country under water, are having serious implications for businesses worldwide, particularly with computer and storage purchases.
"Thailand has been a major hub for hard-drive manufacturing, both for finished goods and components," Mr. Gordon said. "We estimate the supply of hard drives will be reduced by as much as 25% (and possibly more) during the next six to nine months. Rebuilding the destroyed manufacturing facilities will also take time and the effects of this will continue to ripple throughout 2012 and very likely into 2013."
Although large PC OEMs will see fewer problems than others in the industry, no company will be wholly immune to the effects on the HDD supply chain. Gartner has reduced its shipment forecast for PCs, which has impacted the short-term outlook for the hardware sector. The impact of HDD supply constraints on HDD and PC shipments in the first half of the year compound the cautious environment for hardware spending in general.
Telecom equipment spending is projected to show the strongest growth, with revenue increasing 6.9% in 2012, followed by the enterprise software market, which will grow 6.4% (see Table 1).
"With the Eurozone crisis causing uncertainty for both businesses and consumers in Western Europe we have adjusted our forecast, and we expect IT spending in Western Europe to decline 0.7% in 2012," Mr. Gordon said.
Here are updated historical currency exchange rates of key currencies vs. the U.S. dollar. In all cases the 2011/2010 change is noted:
Here are recent “electronically important” metal prices: