A slowdown in hiring during the holidays took some of the steam out of the Buffalo Niagara region’s manufacturers in December.
A new survey of local purchasing managers found that business grew a little more slowly last month at the region’s factories, as shrinking employment offset solid increases in both production and the flow of new orders.
“The survey was positive for the most part,” said Jay K. Walker, the Niagara University economist who compiles the monthly report for the Institute of Supply Management – Buffalo. “But employment was weak.”
Walker added that “it may be a seasonal thing, in that we saw the same thing last year to close the year in 2013, which then dragged over into the 2014 first quarter.”
But the slump in hiring, which has hit the region during two of the last three months, also could reflect the impact of new technology on manufacturing, allowing factories to produce more with fewer people.
“As productivity has increased in recent years, total manufacturing employment has trended down in the greater Buffalo Niagara region,” Walker said. “Much of the manufacturing renaissance in the U.S. has not led to broad increases in employment among low- to mid-skilled workers.”
Three of every eight purchasing managers surveyed said their firms cut jobs last month, up from a little more than a quarter during November, making December the worst month for the manufacturing job market in the last 5½ years.
As a result, the group’s business activity index slowed to 57.4 during December, from 62 in November, leaving it well above the tipping point of 50 – the dividing line between a growing and contracting manufacturing sector – for the 19th time in the last 21 months. The pickup in growth last month extended the growth streak for Buffalo Niagara manufacturers to 10 months, although the pace of the growth was less robust than it was in November.
Driving the index higher were continued growth – albeit slightly slower than November – in both new orders and production, with half of the managers surveyed saying output and orders increased at their firms. Although the pace of last month’s growth was down from slightly less than three in five during November, the pace of the expansion still was the second-fastest since June.
Despite the plunge in oil prices, the local managers said commodity prices continued to rise at a modest pace in December. Inventories grew at a slightly faster pace last month, the survey found.