Against a backdrop of a steadily, albeit slowly, improving U.S. economy, the business for interconnect, passive and electromechanical electronic components has also exhibited steady-but-slow growth so far this year. Many component manufacturers and distributors are experiencing favorable y-y and q-q comparisons through the first half, and those who aren’t are at least running flat. And for all, most are seeing stronger than usual book-to-bill ratios going into this, the third quarter. Overall, the general take-away so far is that the year is going to be better than last, though not by as much as originally planned. But let’s dig a little deeper into the situation.

The past couple of years the industry has experienced a third quarter decline that has lead to an overall weaker second half than first half. The good momentum going into the third quarter, and the extra strong backlog, coupled with some favorable leading indicators for second half U.S. industrial production, have me believing that this year we are going to buck the recent trend and the second half of 2014 will be at least as good as the first half, if not better. And even better, we will see 2015 follow the same pattern.

But this is not a universal opinion as some economic forecasters going into Q3 started revising 2014 forecasts for GDP and industrial production, and indicators like the Purchasing Managers Index started trending down. Mid-way through the year, the TTI suppliers who share distributor POS trend data with their channel partners in aggregate had the year growing 4.1% versus the 7.4% y-y growth these suppliers experienced in 2013.

But setting aside short-term directional trends, I do find the current 2014 forecast numbers to be uplifting. For high tech industrial production, the most recent MAPI forecast is +4.7% for 2014, +8.5% for 2015, and a whopping +10.4% in 2016. Bishop and Associates forecasts total U.S. connector industry sales are forecast to be +6.5% for the year, and the forecasts out of the semiconductor industry are even more encouraging.

There is no doubt that 2014 will be a growth year for IP&E components, and the industry will outperform the overall GDP growth rate. My belief is that we will finish the year up closer to 5% than 4%, and even better than that if semiconductor results are included. I also believe that 2015 will be a growth year and that IP&E growth rates will be even better, closer to 6% than 5%.

This kind of steady, but mild growth is perhaps a bit boring but remember, after every exciting surge the industry has had, there has been a stomach-dropping plunge. The way the industry is developing post great-recession seems much healthier and more sustainable.

Reprinted with permission from Electronics Sourcing North America.

Michael Knight

Michael Knight

Michael Knight is a 13-year TTI veteran with more than 25 years of industry experience to his credit. Recognized as a top industry thought leader he currently holds the position of Senior Vice President, TTI Americas.

At TTI, Knight oversees the Corporate Product Department.

View other posts from Michael Knight. View other posts from Michael Knight.
Search MarketEYE
Filter Articles By Category

View All Connector Articles

Select Contributor to view their article(s)

View All Passive Articles

Select Contributor to view their article(s)

View All Switches & Relays Articles

Select Contributor to view their article(s)

View All TTI Insights Articles

Select Contributor to view their article(s)

View All New Technology Articles

Select Contributor to view their article(s)

TTI Insights
Stay Updated

Enter your email address below to recieve email updates whenever we publish new content.