CircuiTree - December 2008 - (Page 47) By Walt Custer and Jonathan Custer-Topai Slowdown Signals Abound…Will a PostElection Bounce Brighten the Outlook? I am writing this article on a historic day. Barack Obama was just elected the 44th president of the United States. I mention this not only because of its political and social significance but also because of the yet unknown economic bounce after that it may bring. World electronic industry and general economic data are quite sobering to date. Hopefully a modest post-election upturn is on the horizon. U.S. consumer confidence was at a 26-year low in September (Chart 1) as most retailers are predicting a grim holiday buying season. PC, cell phone, and other consumer electronic forecasts have suffered. Globally, electronic equipment growth was already decelerating in Q3 FY 08 and the consolidated (but limited) guidance for Q4 FY 08 was negative (Chart 2). Fortunately (and somewhat surprisingly), inventories still remain in reasonable control throughout the supply chain (Chart 3). Hopefully we have learned a lesson from the post2000 bubble meltdown where excess stock levels were the main driver Chart 1 Chart 3 for recession. In the U.S., electronic equipment order growth has moved into negative territory (Chart 4) and global EMS providers (excluding Foxconn, who is silent) have predicted a negative Q4 FY 08. The entire world electronics food chain is now at or near a zero growth point on the current business cycle. Late 2008 through at least mid-2009 prospects look bleak. Let’s hope a post-election bounce changes my mind! General Market Comments The International Monetary Fund expects the world economy to expand 3.9 percent in 2008. In late October it slashed its 2009 forecast from 3.9 percent to 3 percent. U.S. computer and electronics manufacturers did not grow their work forces at all in September. Telecommunications companies cut 3,400 jobs. The technology industry is now getting squeezed on two 50 Chart 2 circuitree.com • December 2008 Chart 4 47 http://www.circuitree.com
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