Manufacturers in the state of California have an improved outlook, according to the latest survey from the A. Gary Anderson Center for Economic Research at Chapman University. The overall composite index rose from 54.8 in the fourth quarter of 2011 to 58.9 for the first quarter of 2012. This is the highest level since the first quarter of last year, suggesting that production has picked up from last quarter’s weaknesses. Measures over 50 suggest expansion in the sector, similar to the readings from the Institute for Supply Management.
The industry segment that expanded the most was non-high-tech durable goods, with its index rising from 50.6 (which signifies almost flat growth) last quarter to 61.5 this quarter. This was the first increase since the second quarter of 2011. Non-durables edged slightly higher, with high-tech industries mostly unchanged. The Orange County Manufacturing Survey reflected strong growth, with a minor easing from last quarter, down from 60.6 to 60.3.
Looking at specific components of manufacturing activity, production growth was strong, up from 58.6 to 63.7. New orders were also up sharply, with employment up modestly. Commodity prices have eased off of their highs earlier in the year, but they are expected to continue growing and remain elevated.
Overall, these figures suggest that production in California is growing as we begin 2012. State manufacturers have a mostly upbeat outlook for the year.
Chad Moutray is chief economist, National Association of Manufacturers.
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