Manufacturers Stay Optimistic as Growth Slows : Economy: Chapman University survey shows an upbeat outlook, despite a modest third-quarter slowdown.

By JOHN O’DELL

Oct. 25, 1995 12 AM PT

TIMES STAFF WRITER

ORANGE —

Orange County manufacturers continue to view the economy with optimism despite signs of a modest slowing of the growth they have enjoyed for much of the past year, a new survey shows.

The survey’s findings bolster a recent report by the state Employment Development Department that shows increasing employment in areas such as computer chips and medical instruments that are not dependent on defense or aerospace contracts.

The third-quarter measurement of purchasing managers’ confidence in the economy, prepared by the Chapman University Center for Economic Research, shows that production increased in all types of manufacturing in the county during the July-September period.

And Orange County manufacturers are more upbeat than their counterparts nationally, said Raymond Sfeir, the economist who conducts the survey for the private university.

“The manufacturing economy of Orange County, and in fact of California as a whole, is performing better than the national” norm, Sfeir said.

A composite index of new orders, productivity, hiring and other factors affecting manufacturing in Orange County fell slightly to 57.8 from 58.5 in the second quarter. Index measurements in excess of 50 indicate that the manufacturing sector grew, however.

The slower growth was caused by a drop-off in the rate of new orders that manufacturers in the county received during the quarter, Sfeir said. Only 35% of the survey respondents said new orders rose in the three-month period. That is the lowest level of new orders reported since Sfeir added the question to the survey in the first quarter of 1994.

A survey by the National Purchasing Managers Assn. pegged the economic confidence level among purchasing managers nationwide at 48.6--a slight improvement from 47.9 in the second quarter. But the results still indicate a gradual business slowdown in most of the manufacturing segment, Sfeir said.

In Orange County, 48.6% of the purchasing managers surveyed by the economist said production at their plants increased, while 38.7% said production remained stable during the quarter. Only 12.7%--the lowest number since the survey began in 1988--said production decreased.

Sfeir, who calculates a separate growth index for the county’s high-tech manufacturing industries, said that segment slightly outperformed other manufacturing in the third quarter and grew slightly during the period. The high-tech index was 58.9, up from 58.3 in the second quarter.

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Manufacturing Still Expanding

Orange County manufacturing expanded in the third quarter at roughly the same rate as in the second quarter. The composite index is based on changes in production, employment, inventory, new orders, speed of delivery, raw material purchases and raw material prices. Index levels above 50 indicate growth; below 50 decline: 1st Quarter (1994)

Orange County: 61.8

U.S.: 57.0

2nd Quarter (1994)

Orange County: 56.8

U.S.: 57.6

3rd Quarter (1994)

Orange County: 58.8

U.S.: 57.4

4th Quarter (1994)

Orange County: 66.2

U.S.: 59.6

1st Quarter (1995)