Manufacturing Sector to Keep Growing

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California’s manufacturing sector continues to see sustained growth thanks to more new orders and a boost in production, according to a Chapman University survey released Wednesday.


The quarterly purchasing managers survey from the Gary Anderson Center for Economic Research at Chapman showed the manufacturing composite index rising to 58.4 in the second quarter from 55.6 in the first quarter, though down slightly from 60.3 in the second quarter of 2006. An index value above 50 indicates an expansion of the manufacturing sector.


California fared better than the nation, which had an index reading of 55.2 in the second quarter, up from 50.8 in the first quarter and identical to the second quarter of 2006.


Three of the six factors making up the California Chapman index showed increases during the second quarter: new orders, production and commodity prices. The report said that the unusually large increase in commodity prices for the quarter was cause for concern as it means manufacturers are paying more for raw materials.


Another potential cause for concern was a four-point rise in inventories to 56.4, especially for apparel and plastic and rubber products. Higher inventory levels mean that products are not selling as fast as they are being produced. However, it could also be a sign that some purchasers may be stockpiling items in anticipation of increased sales during the second half of the year.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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