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Q3 sales values fall in three key bellwether sectors across Europe

A key index monitoring millions of invoices from over a thousand large businesses across Europe and North America, shows the year-on-year value of sales fell in three of four bellwether sectors in Q3 this year.

The figures form part of the Demica Index, an analysis of trade receivables from 1,200 large corporate companies in Europe and North America. Launched in January 2020, the index analyses anonymised data from millions of invoices processed on the Demica supply chain finance platform. Using baselines, the index provides real-time insight into sector performance across the economy as invoice data is uploaded on a daily basis.

The key findings are:

  • Sales values in the transportation and logistics sector were 27% down (Q3 2023 vs Q3 2022)
  • Paper and packaging manufacturing sales values fell by 24% (Q3 2023 vs Q3 2022)
  • The computer and electronics sector lost 18% in sales value (Q3 2023 vs Q3 2022)
  • Tier 1 automotive was the outstanding performer – achieving an 11% increase in the value of sales (Q3 2023 vs Q3 2022)

The paper and packaging sector has experienced stiff challenges including the downturn in consumer demand and the adjustment to greater sustainability in Europe and North America. The Demica Index reports a 24 per cent decline in sales values for Q3 2023 over Q3 2022. The profile of the quarter has also diverged from Q3 2022, with sales values falling over the quarter in 2023 compared to rising across the quarter in 2022.

However, long-term demand for paper-based packaging is likely to grow as the use of plastic declines. Packaging remains stronger than paper as the supply chain adapts to the shift away from paper to digital documents. E-commerce also continues to grow, as does demand for innovative paper-based packaging. Future Market Insights predicts 4.1 per cent CAGR global market growth in the paper packaging market to 2033.

The Demica Index shows Q3 2023 performance for the computer and electronics sector follows the pattern of the previous two years, with sales values falling away in July, following on from a spike in June, before climbing again in September. This is related to seasonal factors such as the start of the educational year.

Overall, however, there has been a retrenchment in this sector since the pandemic, when the mass migration to home working drove demand. Demica figures show Q3 2023 sales values were down 18 per cent compared to Q3 2022.

Maurice Benisty, Chief Commercial Officer at Demica said, “as the world recovers from the COVID shock we see continued volume declines in Computers and Electronics as demand has fallen from artificially high levels. We’ve seen this trend across multiple sectors, with clients turning to us for working capital support as they look to offer extended payment terms to stimulate demand. On the other hand, we see encouraging results from the tier-one automotive suppliers who are now able to fulfil demand from their customers. Finally, we see challenges in sectors linked to consumer spending, as commodity prices fall in anticipation of the weaker demand bringing about higher interest rates and slower growth.

“As we look forward the expectation of “higher for longer” interest rates even as inflation falls across the US and Europe is likely to continue to drive demand for working capital finance.  At the same time tighter credit markets are expected to see volumes pushed through receivables and payables programmes as opposed to more traditional bank and capital markets lending.”

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