Inland Manufacturing No Longer Growing

The Inland Empire’s manufacturing sector is officially stagnant.

The region’s purchasing managers index for October was 45.9, the third consecutive month that number has been below 50, according to the Institute of Applied Research and Policy Analysis at Cal State San Bernardino, which released the monthly index Monday.

Both of those numbers mean the Inland Empire’s manufacturing sector is no longer growing – below 50 means the sector is contracting, and three consecutive months in either direction means a trend is officially in place – but at least one person is not too discouraged: Barbara Sirotnik, director of the institute and a co-author of the report.

“I’m disappointed that the [index] is below 50, but when I look at the comments in the report I’m not panicking,” said Sirotnik, who predicted that manufacturing in Riverside and San Bernardino counties will start to turn around early next year.

“People pointed out that there is some seasonality in these numbers, and that even with the drop we’re better off than than we were last year at this time. So I’m not happy, but I’m not too concerned, either.”

The seasonality refers to the late summer/early fall surge in Christmas-related manufacturing that is mostly finished by October. However, Inland Empire manufacturing has also been hurt by a roughly 32 percent increase in the value of the U.S. dollar that has occurred during the last year, regional economist John Husing said.

That increase has made U.S. exports more expensive, a trend that is putting a dent in local manufacturing. However, the same trend means imports are cheaper, which means more goods will be coming into the country, with a lot of those items certain to end up the Inland Empire.

“We’re the capital of logistics in the western United States, so we benefit from cheaper imports,” Husing said. “But the downside is our manufacturing sector gets hurt.”

The October index wasn’t all doom and glom.

Production and new orders were both up slightly, and Inland Empire manufacturers were slightly more optimistic about the economy’s immediate future than they were in September. Twenty three percent said they expect the economy to get stronger during the next three months, up from 10 percent month-over-month, according to the index.