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California manufacturing could rebound in first quarter

January 8, 2010 | 10:49 am

California manufacturing could be headed for an upswing in the early part of the year, according to researchers at Chapman University.

A quarterly index based on surveys of purchasing managers throughout the state predicts that performance in the manufacturing industry will reach its highest level since the first quarter of 2006.

The expected 60.7 index reading for the first quarter of 2010 would improve on the 54.5 reported in the last quarter of 2009 and the 53.8 from the third quarter, according to the A. Gary Anderson Center for Economic Research. The index plunged to 40.9 in the first quarter of 2009, according to the center, which has calculated the index since 2002. Any value over 50 represents expansion.

It’s a cheery outlook, especially given the dour employment figures released today. The U.S. economy lost an additional 85,000 jobs, keeping the unemployment rate steady at 10%.

But according to the Chapman Center, all manufacturing sectors look healthy, including high-tech, durable goods and non-durable goods.

The index for high-tech manufacturing is projected to jump to 62.3 from 58.4 in the last quarter of 2009. Durable goods could move up to 57.8 from 50 last quarter, while non-durable goods could jump to 62.4 – the highest level since the fourth quarter of 2005 – from 56.4.

Production, new orders and commodity prices are all expected to increase. The employment index could push past 50 for the first time since the last quarter of 2007, moving up from 45.1 last quarter to 53.5. The index fell to 33.5 in the first quarter of 2009.

After diving to 43.6 in early 2009, the production index could jump to 69.6 from 59.8 last quarter. The new orders index is expected to boom to a 66 level from the 59.1 it reached last quarter.

The commodity price index could rise to 62.2 from 58.8 after swinging, over the course of a year, from 87.8 in the second quarter of 2008 down to 35 in the first quarter of 2009.

-- Tiffany Hsu