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Local Factories Show Growth in April

By David Robinson

NEWS BUSINESS REPORTER

May 4, 2011
 
 
The Buffalo Niagara region's manufacturers kept chugging along at a solid clip during April, a local purchasing managers group reported Tuesday.

An index of business activity at local factories continued to show robust growth last month, extending an expansionary spurt that began in March after a steep slowdown in February.

The radical ups and downs over the last three months are a sign that local manufacturers are growing, although at a more subdued pace that lies between the highs and lows of the last three months.

And with commodity prices rising steeply, Niagara University economist Mikhail Melnik predicted that the pace of growth among local manufacturers during the second quarter could settle in at a rate that is slower than what they experienced during the second half of last year.

"Given the rise in commodity prices, it is difficult to argue that the March-April levels will continue," Melnik said.

Still, Melnik said the local factory sector is showing signs of resilience. "This is still a solid performance," he said. "These levels are consistent with the manufacturing sector expansion and the expansion of the overall regional economy."

The National Association of Purchasing Management -- Buffalo's business activity index slipped to 60.8 during April. That was down from 60.9 in March but still at a level that indicates solid growth. The rebound over the last two months followed a February plunge that pushed the index to 45.6, its lowest level since July 2009. Any reading above 50 indicates growth, while one below 50 signals decline.

Production and the flow of new orders both remained robust during April, while employment fell and inventories grew. Commodity prices grew at their fastest pace since June 2008 -- a worrisome trend that could hamper the local economy in the coming months.

"Almost daily, buyers are receiving price-increase notices from suppliers, along with fuel surcharges," said Arthur D. Aramino, who heads the purchasing managers group's business survey committee.

The soaring commodity prices "continue to exert downward pressure on employment, which struggles to gain any traction," he said.

Production at local factories slowed slightly last month but remained at close to the seven-year high it reached during March, with more than half of the manufacturers surveyed reporting increased output.

The flow of new orders hit their highest level since November, with nearly half of the managers surveyed reporting increased orders.

Employment levels, which have zigzagged between growth and decline since September, turned negative again in April, with almost 25 percent of the firms surveyed cutting jobs last month, up from 13 percent in March.

"This suggests the output recovery does not translate into substantial job growth," Melnik said.

Inventory levels continued to grow, but at a slightly slower pace.

drobinson@buffnews.com