Inland Southern California Manufacturing on the Rise

Tuesday, April 2nd, 2013

(Includes excerpts from Press-Enterprise article written by Jack Katzanek posted on April 1, 2013)

Inland Southern California’s manufacturers shifted into a faster gear in March, and many say that the pace will continue to accelerate over the next few months, a report released Monday, April 1 found.

The Purchasing Managers Index for San Bernardino and Riverside counties, one of the more reliable gauges of economic activity for the area, rose to 59.7 last month from 53.7 in February, the Institute of Applied Research at Cal State San Bernardino reported. It is the third consecutive month this index has been above 50, the level that indicates growth in the sector.

The Inland Empire’s index has been above 60 only once in the last three years, in early 2012.

The report was not nearly as strong for the country as a whole. Tempe, Ariz.-based Institute for Supply Management reported its index declined to 51.3 in March from 54.2 the previous month, which had been a two-year high. Analysts attributed the decline to the government’s failure to reach a compromise on its debt by March 1, which triggered $85 billion in federal spending cuts.

The effects of the sequestration cuts were countered by a strong month for manufacturers in housing-related and automotive industries.

Factory executives in the Inland area said that they are receiving more new orders and have been speeding their production. The percentage of managers who believe the local economy will improve in the next few months almost doubled from February to March.

And, while Inland factories have generally been active since the start of the year, most have been getting work done without adding new employees. But the March report suggests more manufacturing sites will be hiring in the short-term future. The Cal State survey was based on responses from 36 Inland companies.

The Inland report ties in with research released last week by economists at Cal State Fullerton that suggests moderate growth in Southern California for the next three to six months, with higher confidence levels, more jobs and more disposable income. Those factors tend to buoy manufacturers who make products that end up in consumer marketplaces, said Adrian Fleissig, a CSUF economist.

Raymond Sfeir, an economist with Chapman University, said he was surprised that the national PMI declined in March because there was almost no trickle-down effect from the sequestration process that would slow business growth and cause the order books for manufacturers to dry up.

Sfeir said he was encouraged that the Inland report was solid last month. He said Chapman University is getting ready to release a statewide study on manufacturing, and he speculated that the Cal State San Bernardino numbers could be a harbinger of good news across California.

“If the Inland Empire is doing well, maybe we’ll find that California is doing better than the rest of the nation,” Sfeir said.

To read the full article on PE.com, click here.