California’s Manufacturing Sector Experiences Slower Growth

By October 10, 2012Economy

Growth in the manufacturing sector in California has slowed in the fourth quarter, according to the A. Gary Anderson Center for Economic Research at Chapman University. The composite purchasing managers’ index (PMI) in its latest survey declined from 61.1 in the third quarter (July) to 58.0 in the fourth quarter (October). These readings suggest that manufacturers in the state continue to experience growth, but at a slower pace than earlier in the year.

The high-tech industries continue to have strong growth, with the PMI for the sector only off slightly from 62.0 to 61.7. Meanwhile, other manufacturers in the state have seen slower growth. The PMI for other durables (aside from those firms in high-tech) declined from 58.7 to 56.8, and the index for nondurables fell from 62.7 to 57.4. Measures for production, new orders, and employment eased their rates of growth in this survey. Raw material prices are expected to rise in the coming months, as we have seen in other reports.

The sample comments tend to support the view that growth is slowing for manufacturers in the region. A wood products manufacturer said, “Although business has been up for most of the year, we have seen a dramatic slowdown in orders especially from local, state, and federal agencies.” Other comments mentioned rising prices, a still-weak (but improving) housing market, and the upcoming election. On the latter point, uncertainty regarding the fiscal cliff was mentioned several times, with a fabricated metal producer worried about higher taxes and regulation and an aerospace manufacturer noting possible cuts in the military budget.

Chad Moutray is chief economist, National Association of Manufacturers.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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