Counterpoint Macro Index Further Improves in Q2 2023 but Remains in Negative Territory

  • Counterpoint Macro Index reading of 79.53 for June 2023 marked the second quarterly rebound in a row and the highest level in 9 months.
  • Geopolitical tensions, poor demand visibility, tougher regulatory measures and a tepid outlook in China are the biggest constraints to the tech industry.
  • Meanwhile, consumer and producer inflation rates have dropped considerably across the world, lowering the risk of recession and boosting business sentiment. The excitement around AI and VR is adding further impetus to the tech industry’s outlook.
  • Our new forecast continues to show gradual recovery and we expect normalization by H2 2024.

London, Beijing, Taipei, Seoul, Boston, Toronto, New Delhi, Hong Kong – July 31, 2023

The Counterpoint Macro Index’s reading at the end of Q2 2023 was 79.53 as of June 2023, a small increase of 2.08 points from the reading in March. The reading in June marked the Index’s fourth straight monthly increase, despite being in deeply negative territory (baseline: 100) for 17 consecutive months. It was also the second quarterly rebound in a row and the highest level in nine months.

The Counterpoint Macro Index tracks the environment and prevailing sentiment in the global technology industry.

Counterpoint Macro Index, June 2023 vs March 2023
Source: Counterpoint Research

The main reason for the improvement was better global economic numbers. Most notably, consumer and producer inflation rates have dropped considerably, ensuring central banks start contemplating an end to the rate hike regime. On the other hand, employment and consumer sentiment have remained strong, while business sentiment has recovered, particularly in the US. As a result, the tech sector can afford to breathe a sigh of relief. The tech sector was among the most bearish for some time, but the outlook has brightened after Big Tech reported a resilient set of earnings during Q1 2023. Additionally, excitement around emerging tech like AI and VR, and the launch of new products such as foldable smartphones, widening availability of renewable energy solutions and electric vehicles, has reignited hopes that demand normalization may be achieved in 2024.

On the other hand, unsurprisingly, the biggest constraints for the Index in Q2 2023 were yet again in the international arena, as the Russia-Ukraine War continued without an end in sight, US-China relations remained tense after some near accidents and high-level meetings between officials. One issue that we did not foresee was China’s economic recovery reversing course quicker than previously expected. This additionally darkened the prospect for a global recovery in tech demand, particularly as gloomy projections for device sales such as smartphones and PCs continued due to high levels of inventory across the supply chain. Furthermore, regulations have also become more confrontational, with high-profile cases involving competition, privacy, national security and the future of AI playing out in the public.

Risk impact map, June 2023
Source: Counterpoint Research

Our new 12-month forecast, which extends to June 2024, shows that the current recovery trajectory is expected to remain on course. It is slightly below the forecast we made back in June 2023, but nevertheless, the Index is expected return to positive territory by H2 2024. We believe the worst of the macroeconomic headwinds have already passed, as encouraging economic data around the world will continue to boost growth prospects for tech. Despite this, there continue to be significant potential pitfalls, such as the worsening US-China tech war, the Russia-Ukraine war turning deadlier, polarization in the US and European politics leading to policy paralysis, continued weakness in consumer tech spending and demand/supply rebalancing taking longer than expected.

Counterpoint Research’s market-leading Macro Index is a monthly tracker that aims to capture the environment and sentiment for the global technology industry. We look at issues and measures in macroeconomics, domestic and international politics, supply chains, industry performance and outlook, and regulatory events and outlook. The index captures more than 130 data points every month. Below are some of the key data points that we track:

Macro Index key data points
Source: Counterpoint Research

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Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

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