BANNOCKBURN, IL – Economic growth in the US in 2021 is expected to be 6.6%, while 2022 GDP growth is forecast to be 4.5%, says IPC. Manufacturing output in the US slipped 0.1% last month.
Manufacturing output in Europe declined 0.8% in May. Europe’s economy is expected to grow 4.7% in 2021 and 4.2% in 2022. In Europe, the manufacturing PMI increased 63.5% in June, setting an all-time high, says Shawn DuBravac, Ph.D., chief economist, IPC.
In Canada, the economy is expected to grow 6.2% this year and 4% next year. Mexico’s GDP is expected to rise 5.6% in 2021 and 3% in 2022. China’s growth is forecast to be 8.5% in 2021 and 5.6% in 2022. China grew 7.9% in the second quarter.
Five key themes are combining to define the current economic environment, says IPC, including supply chain constraints, manufacturing optimism, inflationary pressures, a tight labor market and the rising risk of a Covid resurgence. The electronics industry continues to be plagued by supply chain disruptions, says DuBravac.
“While pressure from these disruptions will improve in the coming months, we believe supply chain disruptions will continue to reverberate through the economy, and the electronics industry, well into next year.
“In China, second quarter GDP came in slightly below expectations, which was likely the result of slowing domestic demand and supply chain disruptions that curtailed export growth. In Europe and the United States, manufacturing output has declined in recent months. This is especially true in the auto sector,” says DuBravac. “Incoming data suggest backlogs remain elevated; inventories remain short; and lead times remain historically long.
“PCB orders in June were higher than any month since early 2006. EMS bookings in June rose 61.3% year-over-year. North American EMS shipments in June were up 14.3% compared to the same month last year.”
In the US, consumer prices were up nearly 1% in June, and over the last three months, consumer prices were up an annualized 9.7%. Over the last six months, prices increased an annualized 7.3%.
“The biggest risk factor by far [to economic activity] is the risk of a reemergence of Covid.” With the spread of the Delta variant, “cases are rising and, most alarming, hospitalizations are accelerating” in the US. As a result, “consumers and businesses [could] forgo spending and investment and move available funds to precautionary savings.” Also, “reinstituted restrictions could temporarily curtail economic activity while those restrictions are in place.”
Industrial production rose 0.4% in June in the US, while manufacturing production declined 0.1%. “The manufacturing production decline was driven by a 6.6% decline in auto production. Manufacturing outside of autos increased 0.4% during the month and is now above pre-pandemic levels.
Overall capacity utilization in the industrial and manufacturing sectors increased 75.4% in June. Computer and electronic production capacity utilization grew 76.3%, while utilization for motor vehicles and parts rebounded to 69.4%.