Local manufacturers continue to heat up this spring.
After treading water during the winter, local factories in the Buffalo Niagara region had their strongest growth in eight months during May, as new orders flowed in faster and production picked up, according to a survey of local purchasing managers released Thursday.
“We fared pretty well this month, continuing the overall good results from April forward,” said Jay K. Walker, the Niagara University economist who compiles the monthly business activity report for the National Association of Purchasing Management–Buffalo.
The improvement during May extended the growth streak at local factories to a third month. The group’s business activity index jumped to 62.6 during May – up from 62.2 in April and its highest level since October. That put the index well above the tipping point of 50 – the dividing line between a growing and contracting manufacturing sector – for the 13th time in the last 15 months.
The strength during May was broad-based, with production and new orders rising strongly, while inventories also grew. The main negative in the report was a slump in hiring, with factory employment dropping for the first time in three months.
“Employment was a bit soft, but with the overall other results, I’m not too worried about it,” Walker said.
The biggest positive last month was a spike in new orders, which hit their highest level since October and extended an expansion that began last July. Two-thirds of the companies surveyed said they booked more orders last month, up from 56 percent during April. None of the companies surveyed said their order flow weakened during May. Production also improved slightly and hit its highest point in eight months, with five in every nine managers surveyed saying that output increased at their factories.
With the strength in new orders, “it is possible that production activity levels could be anticipated to remain the same or increase over the near term,” Walker said.
The pace of hiring, which had been a weak spot throughout the fall and winter, weakened during May after showing improvement in March and April. With 22 percent of the firms adding workers and 22 percent reducing employment, Walker said, the longer-term trend may reflect stability in factory employment.
Inventories grew for the third straight month, while commodity prices rose at a significantly faster pace than they did during April.