Manufacturing Business Growing, Survey Finds

Bucking a national slowdown in industrial production, manufacturers in Orange County say business grew moderately in the first quarter, a new survey shows.

Most signs in the quarterly purchasing manager survey by Chapman University’s economic research center point to continued, if slower, growth through the spring.

Employment, however, remains constrained as local manufacturers worry that the softening national economy ultimately will clamp down on demand for their products, Chapman economist Raymond Sfeir said.

A composite index of Orange County manufacturers’ productivity, new orders, inventories and other factors continued to show growth, although dipping slightly to 55.7 from 58.6 in the previous quarter. That remained well above the national index of 45.4. Index levels above 50 indicate growth while readings below 50 show that manufacturing is declining.

Sfeir surveys purchasing managers because they are the advance scouts for most manufacturers, using data about output, inventory on hand and new orders to estimate how much raw material to order to meet future demand for their companies’ products. In all, about 90 Orange County-based manufacturing companies are surveyed each quarter.

During the first quarter, Sfeir said, business was best in the medical products and equipment industry. The county’s high-technology electronics manufacturers reported a slower growth rate after a faster-paced quarter in the final three months of 1995.

Overall, Sfeir reported, 68.1% of manufacturers said new orders were the same or higher than in the fourth quarter and 74.1% said production either increased or stayed at the same levels.

Purchasing managers said raw materials prices generally remained flat--meaning that the price of finished goods should not rise in coming months--and that employment levels stayed steady, with 45.2% reporting no change, 27.2% posting gains and 27.6% saying that they trimmed their payrolls.