After 18 months of uninterrupted growth, Buffalo Niagara manufacturers finally had a down month during August – and it was a doozy.
A survey of local purchasing managers found that local manufacturers had their worst month in more than 18 years during August, with new orders drying up, production slowing and employment dropping.
But Jay K. Walker, the Niagara University economist who compiles the monthly report on business activity among manufacturers for the Institute of Supply Management – Buffalo, warned against reading too much into a single month’s decline at a time when most national data still reflects a slowly strengthening economy, other than a weak showing by the Federal Reserve Bank of New York’s Empire State Manufacturing report, which fell to a six-year low during August.
“I found it kind of surprising and am trying not to read too much into it quite yet,” Walker said.
“Overall, the national data series seem to be faring pretty well, and minus the NY Fed’s Empire State report, we seem to be faring okay locally from the feel I’m getting,” Walker said. “If the indices come back weak again with September’s findings I’ll buy into the possible weakness a bit more.”
The group’s business activity index plummeted to 31.7 last month – its lowest level since at least 1997 – from 67.6 in July. The drop pushed the index to a level where business is declining. An index reading of more than 50 indicates growth, while an index of less than 50 is a sign of decline.
The weakness was across the board. Just one of every eight purchasing managers surveyed said production increased at their firms during August, while none said they booked more orders. Employment dropped at seven of every eight firms surveyed.
It was the first negative report from the local purchasing managers since February 2014 and just the third month with weakening business in the last 31 months. It also contradicts other local data indicating that local job growth this summer is stronger than it’s been in the past 25 years.