GPI Inches Up in July

Global Purchasing Index remains in positive territory, but rises only slightly following a jump in June.

Global Purchasing’s monthly business optimism report registered 116.3 in July, an increase of 0.3% over June and an indication that business conditions remain stable for most buyers of electronic components.

The monthly Global Purchasing Index measures optimism among buyers at original equipment manufacturing (OEM), contract manufacturing (CM), and electronics manufacturing services providers (EMS). A reading above 100 indicates optimism, and a reading below 100 indicates pessimism.

The new orders and inventories indexes inched up slightly, while the new purchases and lead times indexes remained largely unchanged during the month. The prices index rose 3% in July, indicating that some buyers are seeing higher prices for many of the components they purchase.

The relative stability in the GPI comes on the heels of a 6% increase in the index in June, and some buyers reported that a summer slowdown seemed to be taking effect throughout the channel.

“[Conditions seem to be] slowing down a little bit,” said one GPI panel member. “It could be the July month effect.”

“The summer slowdown is upon us,” according to another panel member.

New Orders, Inventories Up

The GPI’s new orders index rose 3% to a reading of 2.16, indicating that some buyers are seeing increased orders from customers. The new orders index has remained fairly stable this year, falling slightly in April and May, but for the most part inching up each month. The inventories index rose 3% as well, indicating growing inventory levels among some companies. This is the second straight monthly increase in the inventories index, which has fluctuated since January, as some companies reported having less inventory on hand in February and May, in particular.

The GPI report follows other positive economic news in the manufacturing sector in July. The Institute for Supply Management’s Report on Business, released August 3, showed that the manufacturing economy grew for the 31st straight month in July and that the overall economy grew for the 74th straight month. ISM’s Purchasing Manager’s Index registered 52.7%, a decrease of 0.8% compared to June, but still above the 50-point mark indicating growth in the sector. ISM’s new orders, production, and employment indexes all grew during the month as well.