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Manufacturing Hits Highest Level in Region in More than 2 Years

By David Robinson

NEWS BUSINESS REPORTER

December 7, 2010
 

 The recovery by the Buffalo Niagara region's manufacturers picked up steam last month, with an index of factory activity hitting a more than two-year high, a local purchasing managers group said Monday.

A jump in hiring at local factories, coupled with a solid rise in the flow of new orders and an uptick in production, pushed activity among the Buffalo Niagara region's manufacturers to its highest level since August 2008.

"In November, we saw some clearly optimistic developments in the region's manufacturing activity," said Mikhail Melnik, a Niagara University economist.

The accelerated growth rate in November continued a rebound that began in October after local manufacturers were hit by a slowdown in growth during the summer, culminating in an actual decline in business during September, according to a report compiled by a local purchasing managers group.

Local manufacturers "posted a strong recovery from the summer pullback," Melnik said.

Arthur D. Aramino, chairman of the National Association of Purchasing Management -- Buffalo's business survey committee, noted that much of last month's increase resulted from a jump in hiring that followed a slight slump in employment during October.

Overall, the group's business activity index rose to 60.6 last month from 57.4 in October and the highest since it stood at 62.6 in August 2008, just before the economic indicator began a long decline that lasted until late last year. A reading above 50 indicates growth, a level that the index has exceeded every month but one since October 2009.

The bright spot in last month's report was the uptick in hiring by local factories, where a third of the managers surveyed, compared with slightly more than 20 percent in October, said their companies had added jobs. Only 7 percent of the companies said they cut jobs last month, an improvement from the 21 percent with cutbacks in October.

The flow of new orders also strengthened, with the group's new order index reaching its highest point since January, with two-thirds of the companies reporting increased or steady order flows, compared with 57 percent in October.

Production increased slightly last month, pushing the group's production index up to a six-month high of 62.4 from 61.2 in October.

Commodity prices rose, but at a slower pace than in October, although the increase still was tied for the second-fastest in the last 15 months. Inventories also grew, but at a slower pace than in October.

 drobinson@buffnews.com