Manufacturing Up Slightly for July-September Quarter : Economy: The county’s production of goods, accounting for 28% of employment, seems to have recovered, Chapman survey shows.

Orange County manufacturers said business picked up slightly in the July-September quarter.

That is one sign that the recession may be easing, since manufacturing is a big chunk of the county’s economy, accounting for 28% of employment.

Until now, manufacturing output hadn’t grown for almost a year, according to the Center for Economic Research at Chapman University in Orange.

The center surveys about 80 purchasing managers for local factories four times a year.

The survey, Chapman researchers say, is an early indicator of the direction that the county’s economy is heading.

Because the survey measures, among other things, how much raw materials that factories are stockpiling, it serves as a gauge of manufacturers’ confidence in the economy.

“Manufacturing seems to have recovered,” said Raymond Sfeir, a Chapman economist who directs the survey. “And manufacturing usually matches the movement of the economy as a whole.”

A similar nationwide survey also suggests an upswing in manufacturing output across the country during the third quarter. (The latest national figures, from September, however, show the upswing may be losing a little steam.)

The national increase was a bit stronger than the one that buzzed through Orange County’s factories during the third quarter.

A probable reason, Sfeir said, is that the nation has proportionately fewer defense and aerospace firms than does Orange County. Those industries have been hurting.

Also hurting are local companies that make materials for the construction industry, which is in a steep slump.

The Chapman survey questions a cross section of purchasing managers for estimates on how much local factories are producing; how much raw material they have on hand; how much they are buying, and how fast the materials are being delivered. The results are combined into a single index.

If the index is above 50, it means that manufacturing is growing. Below 50, it’s contracting.

The Orange County index was at 51.5 during the third quarter, while the national figure was 53.9. It was the first time that either the county or national index topped 50 since the third quarter of 1990.

The county index dropped as low as 36 during the first quarter of this year--the depths of the recession. The national figure was 38.7 for the same period.

Purchasing managers said factory inventories of raw materials grew last quarter for the first time in more than a year. That could mean that factories are planning more production.

The price of those raw materials grew more slowly than at any point since the survey began in 1988. That, in turn, could mean lower prices for finished goods at the other end of the manufacturing process.

Purchasing managers are surveyed because they are well situated to provide information for short-term forecasting. Their jobs require them to judge market conditions, production demands and other factors to keep their factories operating efficiently.

Manufacturing Growth Orange County’s manufacturing sector grew in the third quarter of 1991, after declining in the three previous quarters, according to a survey of purchasing managers. A separate survey of purchasing managers nationwide also showed signs of recovery. Source: Chapman University Center for Economic Research

O.C. Production Prospects

Of the purchasing managers surveyed, more than 80% said production increased or continued at the same pace in the third quarter.

2nd 3rd Quarter Quarter Increase 49.3% 47.4% Same 28.2 33.8 Decrease 22.5 18.8

Source: Chapman University Center for Economic Research