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Mixed message from I.E. manufacturing report
Industry shrinks while economy shows slow growth
A key economic indicator for the Inland Empire declined last month, a new report shows, with November marking the third straight month the Purchasing Managers Index has been below its target growth number.
However, experts said there are still enough factors indicating the economy in San Bernardino and Riverside counties is slowly growing out of the Great Recession.
The PMI dropped to 46 percent in November, down from 49.1 in October, according to the Institute of Applied Research at California State University, San Bernardino.
PMI measures the state of the manufacturing sector and economy by asking purchasing managers whether production, new orders, inventory, employment and other elements of manufacturing have improved compared to the previous month. Any PMI over 50 indicates growth.
The PMI reached its lowest figure in three years during September, when it dropped to 43.4 percent. Following a gain in October, November saw production and new orders decrease, the Institute of Applied Research reports.
“This is the third month the PMI remained below 50, indicating that the manufacturing sector is no longer growing,” researchers of the survey stated in a press release. “But it its important to note that a PMI over 42.6 percent generally indicates an expansion of the overall economy, thus the Inland Empire economy appears to be continuing its slow growth.”
Commodity prices rose during November, the report states, while the employment index increased slightly and supplier deliveries picked up speed. Both imports and exports also increased last month.
Nearly half of purchasing managers are predicting the economy will stay the same this month, with fewer predicting it’ll be better and fewer believing it’ll be worse.
“November production schedule shows a larger dollar value over October,” one optimistic purchasing manager told researchers. “Much of that work was booked over the summer and has been scheduled to ship as winter nears.”
Others cited the commodity price increases and slowing sales as negative signs going into the holiday season.
“We have had a good year so far but the outlook is bleak with the new year looming and the new business taxes and health insurance laws going into affect,” another purchasing manager said. “The cost of doing business is increasing, making it harder for employers to add workers.”
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