County Manufacturing Report - 2nd quarter 2002

County’s Manufacturing At A Standstill

After a good recovery in the first quarter of 2002, the manufacturing sector of Orange County stalled in the second quarter of the year. Production did increase at a reasonably good rate, but inventories and employment took a tumble. Commodity prices decreased slightly and suppliers delivered their goods barely faster than the first quarter. The national manufacturing sector fared better. Production and new orders increased, and employment remained virtually unchanged.

Overall the Composite Index decreased from 57.7 in the first quarter of 2002 to 49.9 in the second quarter of the year. This new level indicates that there was no change in the manufacturing sector of the county. There continue to be major differences among the performances of the various industry groups within the manufacturing sector.

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The Composite Index consists of the results of the survey of Orange County purchasing managers regarding changes in the levels of production, employment, new orders, inventories of purchased materials and supplier deliveries.

Production was reported to have increased most rapidly in the following industries: Food & Kindred Products; Printing & Publishing; Rubber & Plastics Products; Electronic & Other Electrical Equipment & Components; Transportation Equipment; and Instruments. The Chemicals & Allied Products industry reported a slight decrease in production. Commodity prices were reported to have decreased most rapidly in the following industries: Food & Kindred Products; Electronic & Other Electrical Equipment & Components; and Transportation Equipment. Small increases in commodity prices were reported in the following industries: Apparel; Rubber & Plastics Products and Fabricated Metal Products. New orders were reported to have increased most rapidly in the following industries: Food & Kindred Products; Paper & Allied Products; Fabricated Metal Products; and Rubber & Plastics Products. A slight decrease in new orders was reported in the following industries: Stone, Clay & Concrete Products; Industrial & Commercial Machinery & Computer Equipment. Employment was reported to have decreased most rapidly in the following industries: Industrial & Commercial Machinery & Computer Equipment; Electronic & Other Electrical Equipment & Components; and Instruments. Employment was reported to have shown a modest increase in the following industries: Food & Kindred Products; Chemicals & Allied Products; and Transportation Equipment.

The purchasing managers have also reported the following:

Inventories of purchased materials continued to decline and at a faster rate compared to the first quarter of 2002.
The High-tech group of industries’ performance took a downward turn. On the other hand the nondurable goods group of industries grew in the second quarter.
The speed of supplier deliveries was marginally faster.
Production and new orders in the Surgical, Medical, & Dental Instruments & Supplies industry showed a slight increase compared to the first quarter of 2002.

This report is published quarterly by the A. Gary Anderson Center for Economic Research of Chapman University for more information please contact Dr. Raymond Sfeir, Professor of Economics at (714) 997-6693.