News from WECC members

4 September 2017

The end is in sight for the current business growth cycle, but the timing varies country by country

By Sharon Starr, director of market research, IPC

This month marks the 10th anniversary of the global financial meltdown that triggered the credit crisis and led to the Great Recession. Also this month, the Economist Intelligence Unit (EIU) published a revised economic forecast that includes some notable changes. This is important information for the electronics industry because the industry is largely cyclical, meaning that its growth is heavily driven by economic growth and tends to reflect it directionally.

First the good news: the global economy is strengthening. Among the indicators are higher manufacturing purchasing managers’ indices and falling unemployment rates in the developed world. The EIU predicts faster global economic growth in 2017, up 2.8 percent from the prior year. According to the EIU’s Global Forecasting Service update on August 16, “A decade on from the financial crisis, the global economy is finally in a sweet spot, albeit one that will prove short-lived.”

The current pace of growth is not expected to last long because the world’s leading economies are at different points in their business cycles. The EIU believes China is furthest through its current expansion phase, with evidence of capacity constraints in some sectors and tightening monetary policy that is curbing credit growth. In Europe, the expansion phase is less advanced as it is still in recovery mode. Unemployment in Europe remains high compared to other advanced economies and compared to its pre-crisis levels. Deflation remains a concern in Japan. Brazil, and Russia, among emerging markets, are only just coming out of recession.

The news for the U.S. is generally good. Economists have been warning of an imminent end to the current growth cycle in the U.S. which, at eight years, is among the longest on record. Recent forecasts have indicated a downturn in 2019, which the EIU now predicts will wait until early 2020. It is based on the view that the U.S. rate of unemployment, now at 4.3 percent, could still go lower and inflationary pressures will take longer to build. The EIU predicts that U.S. inflation will start to rise more significantly in the second half of 2019 when unemployment will be well below 4 percent. Depending upon the Fed’s response, the predicted dip in the first half of 2020 will be shallow and the recovery relatively quick, with GDP growth for the year forecast at 0.8 percent.


Source: Economist Intelligence Unit, Global Forecasting Service, August 16, 2017,

While economic growth is a major factor in forecasting growth in the electronics industry, there are others that deserve attention. Technological innovations and the pace of new-product introductions tend to lift industry growth above overall economic growth, while price degradation can exert downward pressure on industry growth. Some market segments, such as defense electronics, are affected by government spending, which puts them a step removed from the impact of economic growth, but no sector is immune to economic cycles.

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North American PCB Orders Up, Sales Down, Raising Book-to-Bill Ratio

IPC Releases PCB Industry Results for July 2017


BANNOCKBURN, Ill., USA, August 31, 2017 — IPC — Association Connecting Electronics Industries® announced today the July 2017 findings from its monthly North American Printed Circuit Board (PCB) Statistical Program. Positive year-on-year growth in orders and negative growth in sales continued, driving the book-to-bill ratio up to 1.09 in July.

Total North American PCB shipments in July 2017 were down 6.2 percent compared to the same month last year. This year to date, shipments are 4.4 percent below the same period last year. Compared to the preceding month, July shipments decreased 22.3 percent.

PCB bookings in July increased 8.0 percent year-on-year, driving year-to-date order growth up to 2.5 percent above the same period last year. Bookings in July were down 19.8 percent compared to the previous month.

“Results for the North American PCB industry in July continued a trend of sales below last year’s levels and growth in bookings,” said Sharon Starr, IPC’s director of market research. “This combination of factors pushed the book-to-bill ratio still higher in July. The ratio has been above parity for six consecutive months, indicating the prospect of a recovery in sales by the end of this year.” She added, “The steep declines in month-to-month growth rates should not raise alarms, as these reflect normal seasonal patterns.”

Detailed Data Available

The next edition of IPC’s North American PCB Market Report, containing detailed July data from IPC’s PCB Statistical Program, will be available next week. The monthly report presents detailed findings on rigid PCB and flexible circuit sales and orders, including separate rigid and flex book-to-bill ratios, growth trends by company size tiers, demand for prototypes, and other timely data. This report is available free to current participants in IPC’s PCB Statistical Program and by subscription to others. More information about this report can be found at

Interpreting the Data

The book-to-bill ratios are calculated by dividing the value of orders booked over the past three months by the value of sales billed during the same period from companies in IPC’s survey sample. A ratio of more than 1.00 suggests that current demand is ahead of supply, which is a positive indicator for sales growth over the next three to six months. A ratio of less than 1.00 indicates the reverse.

Year-on-year and year-to-date growth rates provide the most meaningful view of industry growth. Month-to-month comparisons should be made with caution as they reflect seasonal effects and short-term volatility. Because bookings tend to be more volatile than shipments, changes in the book-to-bill ratios from month to month might not be significant unless a trend of more than three consecutive months is apparent. It is also important to consider changes in both bookings and shipments to understand what is driving changes in the book-to-bill ratio.

IPC’s monthly PCB industry statistics are based on data provided by a representative sample of both rigid PCB and flexible circuit manufacturers selling in the USA and Canada. IPC publishes the PCB book-to-bill ratio at the end of each month. Statistics for the current month are normally available in the last week of the following month.


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