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Region's factories see growth in July; Reverses declines in May and June

The Buffalo Niagara region's manufacturers shook off their spring swoon with a solid rebound during July that put them back in a growth mode for the first time in three months, a local purchasing managers group said Thursday.

The National Association of Purchasing Management said Buffalo's index of business activity at local factories rebounded sharply last month from the depressed levels of May and June, fueled by improvement in hiring, production and order flow.

"We are seeing some signs of improvement," said Mikhail Melnik, a Niagara University economist.

The July strengthening was a sharp reversal from the weakness of May and June, when the survey indicated that manufacturing activity locally was declining again.

Melnik said he expects local factories to continue to improve throughout the rest of this year, although he warned that could change next year, when he sees a nearly 50 percent chance of a new recession hitting.

For now, though, the purchasing managers index showed modest strength, although activity still remains below the post-recession peaks that were hit in March and April.

"Manufacturing is moving strongly into the second half of 2011," said Arthur Aramino, the chairman of the purchasing managers group's business survey committee.

The group's index of overall business activity jumped to 55.9 in July, up from 47.8 in June. An index reading above 50 indicates growth, while one below 50 is a sign of a shrinking economy.

Production and the flow of new orders both increased last month after weakening in June. Roughly three of every eight companies surveyed said they increased production last month, up from nearly three-in-10 during June, pushing the group's production index back into growth territory at 53.4 last month, compared with the 2 1/2 -year low of 43.6 set during June.

The flow of new orders also grew for the first time since April, with the group's new order index jumping to 54.8 from 39.8 in June, as almost 70 percent of the companies surveyed reported higher or stable orders, up from less than half in June.

Employment levels improved for the first time in four months, with a quarter of the firms adding workers last month, up from 21 percent in June.

"The survey results failed to show any robust employment gains, but they did support a stable employment situation," Melnik said.

Commodity prices continued to rise at their fastest pace since April, while inventory growth also accelerated.