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Local factories continue to struggle in June

The slump by Buffalo Niagara manufacturers stretched into its fifth month during June as a scarcity of new orders earlier this year led to production cutbacks last month.

Business at local manufacturers has been contracting since February, even though some national indicators are showing improvement at factories after a difficult 2015, according to a new survey of purchasing managers in the Buffalo Niagara region.

“Things weren’t the best,” said Jay K. Walker, the Niagara University economist who compiles the monthly business activity index for the Institute of Supply Management – Buffalo.

“Certainly not the weakest results I’ve seen, but we continue to underperform locally relative to broader manufacturing indicators,” he said.

Still, Walker thinks local manufacturers will eventually ride the wave of improvement that has swept across the industrial sector nationally this year.

“I keep believing we’ll eventually turn the corner and fall in line locally,” Walker said.

The latest survey of local purchasing managers showed that business weakened at a slightly slower pace during June, with the group’s business activity index finishing the month at 45.1, up slightly from 44.7 in May. Anytime the index drops below 50, it’s a sign that the manufacturing economy is weakening.

Behind the June weakness was a slump in production, which fell to a 3½-year low last month as nearly half of the manufacturers surveyed said they reduced output. The flow of new orders, however, strengthened last month for the first time since November. Hiring at local factories declined slightly for the first drop in three months.

The survey last year showed that local manufacturers largely avoided the downturn that hit factories nationwide during 2015, only to slump early this year, just as surveys began to show that factory activity across the country was beginning to rebound.

The Empire State Manufacturing survey, compiled by the Federal Reserve Bank of New York, has shown improvement among New York manufacturers for two straight months, although the gains during June were modest.


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