The slump that has beset local manufacturers for most of this year took a turn for the worse in August.
After appearing in July that the slowdown was easing, a steep drop in production and the flow of new orders pushed manufacturing activity in the Buffalo Niagara region to its lowest level since August 2015, according to a new survey of local purchasing managers.
Business at local manufacturers has been declining since February, despite signs of improvement at factories nationwide following a difficult 2015. The group’s July survey indicated that the rate of decline slowed significantly and was close to stabilizing, but the August report showed a significant turn for the worse.
“I find it concerning,” said Jay K. Walker, the Niagara University economist who compiles the monthly business activity index for the Institute of Supply Management – Buffalo. “We’re at seven straight months of the overall index being in contractionary territory.”
The latest survey of local purchasing managers showed that business weakened at a much faster pace during August, with the group’s business activity index plunging to 39.6 after finishing July at 49.5. Anytime the index drops below 50, it’s a sign that the manufacturing economy is weakening.
Behind the August weakness was a slump in the flow of new orders, which declined for the eighth time in the last nine months and hit a 13-month low in August. Production, which had rebounded in July to its highest point since December, slumped again during August, falling to its lowest level since August 2015.
Hiring at local factories held steady during August, as did commodity prices, while inventories shrunk for the 13th straight month.