Connector demand was up in 2014 with the industry showing moderate growth. Will this continue or is the industry in flux? Here is Bishop & Associates’ preliminary 2015 connector industry sales outlook.
Connector demand through the first three quarters* of 2014 was high, with year-to-date sales through September up +9.2%. Connector demand has slowed during the past few months, however. October resulted in orders up only +2.4% and sales up +3.0%. This suggests that growth in 4Q14 was modest (low single digits). Bishop forecasts that 2014 industry sales grew +8.3% over 2013 to $52.9 billion.
So where does that put the forecast for 2015? We believe the current soft demand in the connector space is a trend that will carry over into 2015. There will be growth in 2015, but at a slower pace than 2014. The following are some of the major trends that we believe will hold down connector demand:
- GDP growth is slowing in all regions except the US.
- Europe’s GDP growth is flat-to-declining with no expectations for immediate improvement.
- China’s GDP growth is forecast to decline over the near term.
- Japan is close to slipping into recession.
- Double-digit inflation in Russia along with a falling ruble will likely trigger a recession in 2015.
- Automotive, the fastest growing market sector in recent years, is forecast to slow over the next few years.
- India will not renew excise duty concessions in 2015, causing automobile prices to increase 8% to 25% based on size and make.
- China car sales fell to an all-time low in November, leaving automakers with high inventories.
- Consumer confidence is trending down.
- Increasing ethnic and religious conflict may affect markets.
On the positive side, interest rates are low (China cut its interest rate for the first time since 2012, in late November), the US economy is growing, US unemployment is improving, and energy costs are low. Particularly significant, inflation is modest and unlikely to rise any time soon.
As a result of the above, we believe connector demand will slow from recent growth of around +9.0% to low single digits. In 2015 it will probably result in growth in the 3% to 5% range. We do not, at this time, believe sales demand will decline to negative levels in 2015. The final forecast will be forthcoming in late January when the final results for 2014 are in.
*Writing this in December, we have not quite closed out 2014.
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