ECIA: Increased optimism in the 2024 Q4 components market, and North America is improving

The Electronic Component Sales Trends (ECST) index from the ECIA(Electronic Component Industry Association) exceeded its baseline of 100.0 in August, reaching 108.4, compared to the expected index of 107.9 in September. It is worth noting that the index mainly targets the North American market.

Although supply chain stakeholders have lowered their expectations for growth this year, sentiment around component sales remained positive into the fourth quarter. The Electronic Component Sales Trends (ECST) index from the ECIA(Electronic Component Industry Association) exceeded its baseline of 100.0 in August, reaching 108.4, compared to the expected index of 107.9 in September.

ECIA noted that when the index fell below 100 in June, it raised concerns about the health of the market. While ECST's expectations often exceed actual results, ECIA principal analyst Dale Ford said the optimistic outlook bodes well for the fourth quarter. "Any degree of sustained upward improvement in the market is an important indicator that the market is maintaining positive momentum," he said in a press release. "Based on the results of the third quarter ECST survey, this month-on-month upward market trend is expected to continue into the fourth quarter and the end of the year."
IPC found similar results in its economic survey for August - a slight recovery in the electronics sector in August, but still below the April 2024 peak. The improvement was driven by increased demand and lower costs. Specifically, in August, IPC's demand index increased by 3.3%, although this demand index is still contracting, but the improvement of backlog, capacity utilization to expansion, order sentiment and other factors are driving the improvement of the demand index.
In August, ECIA's semiconductor sales trend improved 5.5 percentage points to 111.8; The sales trend of mechanical and electrical equipment improved by 2.8 percentage points to 108.6. Passive component sales trend increased 6.5 percentage points to 104.7.
The semiconductor market expectations in September have declined from August, but the overall market expectations remain positive at 103.0. In the August and September forecasts, every product subcategory achieved a score of 100 or above.
The ECST Q4 outlook shows that 35% of participants expect growth in the third quarter, and 10% expect growth of 3% to 5%. ECIA reported that component manufacturers have become the most conservative group in terms of sales sentiment, with an overall negative score of less than 100 in both August and September. In previous surveys, this group has generally had the most positive views. The sales sentiment expressed by distributors in their forecasts for July, August and September is very optimistic.
Recent earnings forecasts show that component manufacturers' inventory levels remain high, while distributors have made progress in reducing excess inventory.
With the exception of the two end markets, all other market segments are expected to show positive sales sentiment indicators in September. Only computers and consumer electronics are below 100.