IHS attributes the downturn to two main reasons: the knock-on effect of the lull in investment caused by the oil price crash in late 2014 and 2015; and a drop in confidence in world trading conditions caused mainly by the stability of the European Union and the presidential election in the US.
After the oil price slump, new production facilities and refurbishment programs were reviewed and suppliers, including distributors, have been living off their stock for the business that was about. IHS sees signs that business will return to a more normal growth pattern from 2017 onwards, assuming that there are no further major world economic upsets.
Factors affecting business confidence in the EU include the UK vote to leave the Union, the mass migration from the Middle East and Africa, and the stability of the euro. IHS says that the consequences of Brexit are unclear, but it has caused uncertainty in some market sectors.
Annual revenue growth rates for the global market for industrial Ethernet components Source: IHS Markit
Despite this, Germany’s strong manufacturing base and the impetus behind Industry 4.0 and the Industrial Internet of Things are stabilising factors. IHS Markit believes that the lull in component sales is temporary and the revenue growth rates of the past will return.
