A Conversation with Walt Custer: Market Report

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In a recent conversation, Walt Custer shared current market data and industry trends, detailing those market segments and regions that are currently seeing growth and those that are in decline. Walt also offered his interpretation of the data, which he uses to forecast the upcoming month.

Barry Matties: Walt, please begin with an update on the market. What do you think the industry needs to know about current market conditions?

Walt Custer: I think we're kind of at the bottom of this current down-business cycle. I'm seeing signs that things are improving, but they're not improving dramatically. The improvement depends on the region and also the product mix. The global purchasing managers’ index, which I use as kind of an overall barometer, was basically at no growth in April. The economy right now is not growing, but if you look by country, the U.S. was expanding, Europe was expanding even more, and South Korea expanded a little bit. On the flip side, Japan, Taiwan, and China are still below water. Regionally it varies, and part of that is tied both to the economy and also the product mix that these countries produce.



In the U.S., we've gotten some good news recently. Printed wiring board sales have rebounded in March. They were up about 10% both on shipments and bookings. Some of our end markets are doing better, like the instrument control, automotive electronics, and medical electronics markets. On the flip side, the volume markets which tend to be more Asia-centric are still struggling, and that includes communication equipment and cellphones. The smartphone market is kind of saturated, and that was one market that a lot of people were depending upon. Apple has seen that their strong growth has kind of curtailed. Related things like the storage industry and hard disk drives, for example, have been hit. Those end markets have been contracting, but on the flip side, the automotive market has been very strong, and instruments and controls and medical are doing better.

It's really a mixed bag right now, both regionally and product-wise. Fortunately it looks like we're at the bottom of the business cycle as I said, and it looks like we're coming out it. If you look at overall growth of electronic equipment, we're still down about 3.5% in the first quarter, but we appear to have hit the bottom and we're coming back up. As we look forward into the year, I think we're going to start seeing some growth by the mid to end of the year, which is encouraging.

I guess I would summarize it as A) a mixed bag, and B) at the bottom of the business cycle with some recovery in sight.




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