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 Confidence Wanes in December
Global Purchasing Index slips as 2014 ends, but some purchasing professionals remain upbeat about 2015
Purchasing professionals said their business confidence weakened in December, as the Global Purchasing Index dipped below the 100-point mark indicating economic optimism in the industry for the first time in nearly a year. Despite the slow end to 2014, GPI panel members said they look forward to a good first quarter of 2015, citing a backlog of orders that bodes well for January.
“Data from our client base suggests a status quo during the month of December, though total quoted inquiries pending conversion is up, suggesting that January will be quite strong,” one panel member said.
The GPI registered 99 in December, just below the 100-point mark that indicates economic optimism among purchasing professionals. That’s a 19% drop compared to November’s reading of 122. Conducted monthly, Global Purchasing’s GPI surveys a panel of 100 purchasing managers to gauge their business outlook, asking questions about pricing, inventories, lead times, purchasing trends, and customer orders. In December, panel members reported declines in all five categories, with the largest drops occurring in the new purchases and inventories indexes.
Purchasing Activity Declines
The new purchases index dropped 18% in December, as panel members reported buying fewer electronic components during the month. This follows a 3% decline in purchasing activity during November. The panel also reported declining inventory levels, as the GPI inventories index dropped 17% in December, indicating companies had fewer supplies on hand. The inventories index had been climbing in October and November after a 7% drop in September.
The prices index fell 5% during the month, indicating that buyers paid less for their component purchases during the month; this followed a slight increase in the pricing index in November. The lead times index reached its lowest level in nearly a year—a reading of 2.1—indicating that buyers were seeing shorter lead times for components during the month. The slight decline followed two months of steady lead times.
Buyers also reported a slight decline in new orders, as the new orders index dropped 2 percentage points to a reading of 1.8. The new orders index fell slightly in November as well.
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.