Stable commodity prices and better supplier performance could not make up for a drop in production and new orders during August, a local survey of purchasing managers found.
"New orders and production took a drastic reduction for the month of August," said Robert E. Schenk, chairman of the business survey committee of the National Association of Purchasing Management -- Buffalo Inc. "Our hopes of increased production as a result of increased orders for June and July did not materialize this month."
The number of managers reporting lower production in August increased to 36 percent from 27 percent in July, while the number reporting increased production dropped to 28 percent from 35 percent the previous month.
The volume of new orders also declined. Forty-three percent of the managers said new orders declined in August compared with 23 percent who cited declines in July.
Only 21 percent said new orders increased, down dramatically from 54 percent who had higher levels of new orders in July.
The declines in production and new orders slowed down hiring at local businesses, the group said.
Higher employment in August was reported by 25 percent of the purchasing managers, down from 35 percent the previous month, while 61 percent said employment was unchanged, up from 46 percent in July.
The good news in August was a general decline in the rate of commodity price increases, the group said.
The number of managers reporting higher prices declined to 32 percent from 42 percent in July, while 61 percent had stable prices, compared to 50 percent in July.
Another plus was better performance from vendors, with only 21 percent missing their promised delivery dates in August, down from 27 percent in July. "This is still far below the 85 percent of on-time delivery we expect," Schenk said.
The levels of purchased inventories also declined during August, with 18 percent of the managers adding to their inventories, compared to 27 percent in July.
Unchanged inventories were reported by 61 percent of the managers, up from 46 percent in July.
Items in short supply included MEK, sulfuric acid, magnetic steels, acetone, polysulfone, computer chips, rutile, zircon, rare earth oxides, castings and hydraulics.