Manufacturing Upswing Continues

Manufacturers in Orange County continued to express optimism about the economy during the fourth quarter, reporting moderate growth in most industries, according to a survey by Chapman University’s economic research center.

“It took us a while to come out of our recession, but now it looks like we are doing better than the nation as a whole,” said Raymond Sfeir, the Chapman economist who conducts the quarterly survey of 75 local manufacturers.

A composite index that measures economic confidence among county purchasing managers rose slightly from the previous quarter and remained well above a comparable national index that shows a manufacturing slowdown in most of the country over the last nine months.

It was the 11th consecutive quarter in which the Chapman survey reported manufacturing industry growth in the county.

Purchasing managers, whose jobs include monitoring and predicting demand for their companies’ products, reported that production picked up in the county’s high-technology industries but remained flat in medical, dental and surgical instruments manufacturing during the period.

Overall, the survey found, new orders continued to grow at the same pace as in the third quarter--an indication that business will continue growing in the first quarter this year.

Index levels above 50 measure the degree of growth while levels below 50 reflect declining business in the manufacturing sector. The fourth-quarter level in Orange County rose to 58.6 from 57.8 in the third quarter. The national index dropped to 46.9 from 48.6 in the same quarter.

For consumers, the local survey held out hope of continued low inflation rates. For the first time since the survey was started in 1988, respondents said they had not experienced any increase in the price of the commodities, or raw materials, that they use in their manufacturing processes.

“That means that the cost of finished goods should stay flat, and that means fewer price increases for consumers in the future,” Sfeir said.

On the downside, the lack of an increase in commodities prices can be traced to lower demand by manufacturers, which coincides with the national survey’s finding that manufacturing activity in most parts of the country declined in the quarter.

“It means we are benefiting from weaker business in the rest of the nation,” Sfeir said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Index Grows

Orange County manufacturing continued to expand through the end of the year. 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 indicates decline:

(please see newspaper for chart)

4th Quarter

U.S.: 46.9

Orange County: 58.6

Source: Chapman University