Factory business declined in December - The Buffalo News
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Factory business declined in December

The Buffalo Niagara region’s manufacturers turned ice cold in December.

Local manufacturers said their business took a downward turn during December, snapping a nine-month streak of uninterrupted growth, according to a new report from the National Association of Purchasing Management – Buffalo.

The weakness during December was virtually across the board, with production and employment slumping, while prices rose and inventories shrunk, the report found. The only bright spot was continued growth in the flow of new orders.

“While a single month doesn’t make a trend, it is a bit concerning,” said Jay K. Walker, the Niagara University economist who compiles the monthly report. “Things were improving for respondents for a good portion of 2013, so maybe it’s only a holiday or seasonal issue.”

The group’s business activity index dropped to 48.4 during December, the first time since February that it showed a decline in local manufacturing, and was well below the solid growth that the survey found in November, when the index stood at 57.2. A reading above 50 indicates growth.

After spiking during the early fall to the strongest growth rates since the Great Recession, business cooled but continued to expand during November, only to turn modestly downward in December.

Production at local factories was especially weak, with a quarter of the purchasing managers surveyed saying output fell at their firms during December, double the amount in November. Only 12 percent of the managers said production increased last month – just a third of the 36 percent that reported increased output during November.

Hiring also weakened for the third straight month and fell to its slowest pace in more than four years. None of the managers surveyed said their firms hired more workers last month, while a quarter reduced employment.

“There was strength mid-year that definitely trailed off as the cooler weather arrived,” Walker said.

The one bright spot in the December survey was the flow of new orders, which grew for the sixth straight month and expanded at a slightly faster rate than during November. Roughly three of every eight managers surveyed said their firms booked more orders last month, while a quarter said order flow slowed.

Walker said he wasn’t sure how much to read into the positive trend in new orders.

“I take this continued expansion with a grain of salt, along with the weakness in other indicators locally,” he said. “Hopefully, this can translate into strength in other areas, but it seems like this value is favorable in spite of the other results.”

Inventories shrunk for the first time since February, while commodity prices rose after holding steady during November and declining in October.

email: drobinson@buffnews.com

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