March 2025

Warm regards,

Thiago Guimarães
Director of Industry Intelligence, IPC

Market Analysis from Shawn DuBravac 

Is the U.S. economy already in recession? 

The short answer is probably no, though the economic outlook remains uncertain. While manufacturing expanded modestly in February, underlying indicators are concerning. The S&P Global US Manufacturing PMI rose to 52.7, exceeding preliminary estimates and improving from January’s 51.2. However, the ISM Manufacturing PMI declined slightly to 50.3 from January’s 50.9. Though the sector has shown consecutive growth months for the first time in over two years, underlying metrics such as new orders—which dropped significantly from 55.1 to 48.6—point to weakening momentum. Manufacturers continue to worry about tariffs, trade disputes, and broader economic uncertainties. 

New orders for durable goods increased in January but were largely influenced by volatile transportation orders. Excluding transportation, durable goods orders were flat. This underscores continued uncertainty and caution among businesses. 

U.S. GDP will likely contract in the first quarter. Retail sales fell 0.9% in January, and a very low savings rate suggests limited capacity for consumer spending. Housing activity remains weak, with housing starts down 9.8% and housing sales falling 10.5%. Additionally, rising initial claims for unemployment insurance indicate softening labor market conditions. Employment growth in February is anticipated to be significantly lower than January, potentially pushing the unemployment rate higher. 

A big driver of weaker GDP growth in Q1 was driven by the advanced international trade report which reported a surge in imports in January, likely due to companies accelerating orders ahead of tariff hikes. Revisions to the Atlanta Fed’s GDPNow model point to a 2.8% GDP decline for Q1. 

Other worrying signs include an inverted yield curve, with the 10-year Treasury yield falling below the 3-month yield at the end of February. Historically, such inversions have been reliable recession indicators, typically preceding downturns by 12 to 18 months. The New York Federal Reserve closely monitors this indicator and publishes monthly updates estimating the likelihood of a recession. At the end of January, when the 10-year yield was 0.31 percentage points above the 3-month yield, the recession probability stood at 23%. With the recent inversion, the probability of a recession will likely rise. 

Even though the risk of a recession in the coming months is rising, the U.S. economy is not likely currently in recession. Nevertheless, expect continued volatility in economic data and headlines as policy dynamics continue to evolve. 

EMS: North American EMS Industry Down 2.4 Percent in January 
IPC’s January 2025 report shows North American EMS shipments declined 2.4% year-over-year, while the book-to-bill ratio remains strong at 1.27, signaling stable demand and potential sales growth in the coming months. 

PCB: North American PCB Industry Sales Up 19.9 Percent in January 
IPC’s January 2025 report shows North American PCB shipments surged 19.9% year-over-year, with a strong book-to-bill ratio of 1.24 and a 44.1% increase in bookings, signaling robust demand and continued market momentum. 

The Current Sentiment of the Global Electronics Manufacturing Supply Chain
IPC's February 2025 Global Sentiment Report indicates that while electronics industry demand has reached its highest level since May 2024, driven by increases in orders, capacity utilization, and backlogs, profit margins remain under pressure due to rising labor and material costs, with recruitment challenges persisting across all regions. 

Unlocking AI for Automated Optical Inspection — A White Paper from IPC's Chief Technologist Council 
IPC's Chief Technologist Council explores how AI-driven computer vision is revolutionizing automated optical inspection by enhancing pattern recognition and quality control, with deep learning models showing high accuracy in object detection and classification, while future advances in generative AI may further refine inspection criteria. 

Maximizing Returns: The ROI of Training in Electronics Manufacturing — A White Paper from IPC Education 
This white paper examines how evaluating the return on investment (ROI) of training programs can enhance workforce performance and profitability in electronics manufacturing. It explores direct and indirect benefits, the importance of cost tracking, and best practices for maximizing ROI through tailored training, continuous learning, and management involvement. 

European EMS Market Experiences Double Digit Negative Growth in 2024, but may Experience Slight Positive Growth in 2025 By Sanjay Huprikar 
IPC’s latest survey, conducted by in4ma, reveals that Europe’s EMS industry faced a challenging 2024 with a 14% decline in PCBA production, though a modest 3% growth is projected for 2025, with sectoral rebounds seen in aerospace, agriculture, and household electronics. 

IPC industry intelligence aims to provide valuable insights into the entire global electronics ecosystem. Through in-depth reports and expert analysis, industry thought leaders provide trend evaluations designed to benefit the electronics manufacturing industry. Learn more and explore IPC’s industry intelligence today.

Contact the team: Shawn DuBravac, Chief Economist; Thiago Guimarães, Industry Intelligence Director; and Kate Koger, Public Affairs Coordinator.