Manufacturers in the Buffalo Niagara region hit the ground running to start 2015.
In fact, they began the year with a flat-out sprint, according to a new report from a local purchasing managers group.
The report released Wednesday showed that business at local manufacturers grew at its fastest pace in more than a decade, fueled by spikes in production, new orders and hiring.
But Jay K. Walker, the Niagara University economist who compiles the monthly report for the Institute of Supply Management – Buffalo, warned against reading too much into January’s strong growth.
“A single month does not a trend make,” he said.
Walker noted that the monthly survey of local purchasing managers has become more volatile in the last two to three months, including a moderate acceleration in growth during November that was almost completely reversed during December.
“The responses may calm down, but when I see more variation, it kind of increases uncertainty about what future months may hold,” he said.
The strong local results ran contrary to the findings of a similar, nationwide survey. The Institute of Supply Management’s nationwide survey found that U.S. factories expanded last month at the slowest pace in a year, as orders, production, and hiring all declined. The figures suggested that manufacturing may not add much to growth in the first few months of 2015.
The Empire State Manufacturing Survey, which polls New York State manufacturers each month, found that factory activity across the state rebounded last month after sagging during December. “As has been the case for much of the past year, indexes for the six-month outlook pointed to widespread optimism about future conditions,” the report, compiled by the Federal Reserve Bank of New York, said.
But the January results from the local purchasing managers survey were even stronger. The group’s business activity index jumped to 73.7 during January, from 57.4 in December – a level that indicated that growth at local manufacturers last month was stronger than it had been in any single month since July 2004. An index reading of more than 50 indicates growth, while an index of less than 50 is a sign of decline.
The pace of hiring and the flow of new orders to local manufacturers was the strongest that it has been during any single month since at least 1998, which is as far back as the survey data goes in its current form. The growth in production was the third-strongest for any month since 1998.
Dean T. Penman, president of Seal & Design, a manufacturer of gaskets, seals and O-rings, said he expects growth at the company to exceed 10 percent this year. Last year, it launched a $3 million expansion project that will nearly double the size of its Clarence plant. “We’re seeing the labor market tightening,” he said.
Two-thirds of the managers surveyed said that new orders increased during January, up from half in December. Nearly 9 in 10 managers surveyed said production rose or was stable at their factories in January, up from 63 percent in December.
The pace of hiring, which slumped badly during December to a 5½-year low, rebounded strongly in January to its highest level in at least 17 years. While just one manager in eight said their companies added workers during December, more than half – 56 percent – said their firms were hiring last month.
“The volatility is still a concern, although improvements in employment are a welcome increase,” Walker said. Broader data on factory employment from the state Labor Department showed that manufacturing jobs locally inched up by less than 0.1 percent in the final three months of 2014.
Despite the plunge in oil prices, the local managers said, commodity prices rose last month at their fastest pace since August. Inventories grew at a much faster pace last month, posting their strongest growth rate since July 2005, the survey found.