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“In spite of serious concerns about both supply and demand impacts in the early stages of the Covid-19 pandemic, it appears sales levels for 2020 will remain fairly stable compared to 2019 with some sectors showing relatively mild declines and others actually achieving growth,” according to Dale Ford, ECIA’s chief analyst. Just days before the ECIA report was issued, the Institute for Supply Management released similar findings – supply executives were more optimistic in November than they were the prior month.
U.S. manufacturing growth has softened but remains above pre-pandemic levels. The ISM’s factory index, the PMI, declined by 1.8 percent -- to 57.5 -- from October’s level of 59.3. ECIA’s December forecast for overall component sales registered 113.9, down from 136.9 in November. The line between growth and contraction is, respectively, 50 and 100.
“Multiple factors could account for the softer outlook for December,” said Ford in a release. “Most prominent is concern about the resurgence of the pandemic and renewed actions by government leaders to combat its spread including the renewed closure of many businesses. The economic impact from renewed quarantines and closures will be reflected across the economy, including electronics.”
Labor was cited as one factor in November’s PMI. There’s no shortage of jobs, said Tim Fiore, head of the ISM’s manufacturing survey committee. The problem is finding skilled labor. Some workers are not returning to their jobs due to virus concerns. Competition for workers has raised wages, so some employees are switching jobs. Labor shortages have slowed down the overall supply chain as ports are clogged, Customs processing is slow and land delivery inconsistent.
As virus cases again surge, “We are not on a positive trajectory in that regard,” said Fiore.
Still, the semiconductor sector has weathered the pandemic very well compared to other component markets, ECIA reported. There were only two months where the semiconductor index dipped below 100 and it usually shows greater strength than other markets in the index.

Source: ECIA
“This relative success in semiconductor sales is illustrated by many forecasts calling for semiconductor sales growth between four percent and five percent in 2020,” said Ford. “By comparison, sales in the electro-mechanical/connector market suffered the most during the year. In addition to seeing declines in four months of 2020, this market segment reported the lowest result of all markets with an index result of 43.4 in May. Sales trends in this market have been weaker than other component categories throughout the year.”
ECIA’s end market demand index has mirrored the component sales indices fairly closely throughout the year. The overall end market index has remained above 100 consistently beginning in August. All eight of the individual end markets measured in the survey moved above 100 in September and remained there through the remaining months of the year. This includes the automotive, consumer and industrial electronics markets which experienced the greatest struggles in 2020.
Overall, demand remains robust, according to the ISM. Customer inventories remain low and backlog of orders remains high. Delays from suppliers is a problem, said one tech executive, but customer demand is rebounding.
There are still many variables that could influence future sales growth, both associations noted. For example, ISM cited disruption in transportation. Shipping containers, which remain in short supply, are keeping ocean freight rates high and land transit has been inconsistent for months, said Fiore, due in part to labor and equipment constraints.
“Manufacturing performed well for the sixth straight month, with demand, consumption and inputs registering growth, but at slower rates compared to October. Labor market difficulties, both current and anticipated, at panelists’ companies and their suppliers will continue to dampen the manufacturing economy until the coronavirus crisis ends,” he concluded.