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.

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.

We post these excerpts more in sorrow than in anger.

Jan Norman, business columnist, Orange County Register, “CEOs rank Calif. worst for business“:

California ranks last among the states and Washington D.C. as a place to do business, according to Chief Executive magazine. It is the second year in a row that the state was given that dubious distinction.

Such assessments are important in the interstate wrestling match for economic growth, Chief Executive notes. “High-stakes competitions for business expansion are nothing new. But with the current unemployment rate, the stakes have gotten much higher. As a result, negotiations for business expansion in 2010 will be more complex and financially significant.”

The publication is so harsh about the California that it calls the state “the Venezuela of North America.”

Investor’s Business Daily, “A Not-So-Golden State“:

For those who live in California, reading the remarks of the CEOs is as eye-opening as it is depressing. For example:

• “Texas is pro-business with reasonable regulations while California is anti-business with anti-business regulations.”

• “California is terrible. Even when we’ve paid their high taxes in full, they still treat every conversation as adversarial. It’s the most difficult state in the nation. We have actually walked away from business rather than deal with the government in Sacramento.”

• “The leadership of California has done everything in its power to kill manufacturing jobs in this state. If we could grow our crops in Reno, we’d move our plants tomorrow.”

Los Angeles Times PolitiCal blog, “California counties top economic stress list”

More than half of the top 20 economically stressed counties in the country — including four of the top five — are in California. That’s according to a new list posted by the Associated Press.

The list ranks “the 20 most economically stressed counties with populations of at least 25,000.” Topping the list was Imperial County, followed by Merced County. San Benito and Sutter counties are fourth and fifth on the list, respectively.

Yuba and Stanislaus and San Joaquin counties also made the top 10

To be explicit, the federal government is emulating the regulatory, tax and fiscal policies and disregard for employers that have brought California to this sad state.

In today’s Wall Street Street Journal, Governor Mitch Daniels of Indiana identifies cap-and-trade as a form of imperialism, as faltering powers in California, New York and Massachusetts attempt to “prop up their decaying economies” by exploiting other states and their citizens.

While not using the term “imperialism,” NAM President John Engler has talked about the same political phenomenon in his recent speeches, drawing attention to California’s economic collapse. Having imposed a high-tax, heavy-regulation, anti-energy regime within the state — driving out manufacturers and other employers — some of California’s members of Congress are promoting the same policies at the federal level. The results will inevitably be the same, stagnation and exodus, only this time businesses will flee farther than Nevada or Arizona.

Mark Steyn, the columnist, sees a slightly different dynamic at play, that of the Europeanization of America. But again, California is the example. From Imprimus:

To a penniless immigrant called Arnold Schwarzenegger, California was a land of plenty. Now Arnold is an immigrant of plenty in a penniless land: That’s not an improvement. One of his predecessors as governor of California, Ronald Reagan, famously said, “We are a nation that has a government, not the other way around.” In California, it’s now the other way around: California is increasingly a government that has a state. And it is still in the early stages of the process. California has thirtysomething million people. The Province of Quebec has seven million people. Yet California and Quebec have roughly the same number of government workers. “There is a great deal of ruin in a nation,” said Adam Smith, and America still has a long way to go. But it’s better to jump off the train as you’re leaving the station and it’s still picking up speed than when it’s roaring down the track and you realize you’ve got a one-way ticket on the Oblivion Express.

Or maybe pull the emergency brake?

Two relevant headlines:

• San Jose Mercury News, “As California budget mess deepens, Schwarzenegger proposes huge new cuts“
• USA Today, “Calif. voters ready to join tax revolt“