Regional manufacturing sector reports strong growthPublished: Friday, August 25, 2017 By: Sarah Terry-Cobo Source: The Journal Record
Machines are moving, orders are up, and employment is steady in the central U.S.
Manufacturing activity is growing faster in the region than it has in the past four months, and optimism is rising, said Federal Reserve economist Chad Wilkerson. The Oklahoma City Branch of the Kansas City Federal Reserve Bank’s monthly sector survey released Thursday found respondents are seeing more orders, particularly in durable goods. Local manufacturers are seeing similar trends to what the agency found.
Wilkerson, branch executive for the local Fed office, said manufacturing growth is the fastest since March, so much that some business owners said they anticipate raising prices soon.
“That’s a sign they feel confident in the strength of the sector and their ability to do so,” he said.
Overall, the American economy is on fairly solid footing and the energy sector is growing steadily too. A few months ago, there was more uncertainty around the oil and gas sector, but West Texas Intermediate prices have stabilized around $50 per barrel. Though that’s not a tremendously profitable commodity price environment, but it’s enough to encourage investment, especially in Oklahoma, he said.
Activity increased solidly at durable goods manufacturers, particularly for electronics metals and aircraft products.
HSI Sensing President Ryan Posey said he had not seen the survey but generally agreed with the results. The Chickasha-based manufacturer of electronic switches has seen a strong pattern of solid, short-term growth.
The company recently launched a new product line, and buyers are bullish on electronics and electronic components, he said. More customers are interested in products made in the U.S., Posey said. His clients include appliance makers, aerospace businesses, oil and gas firms and those who want security sensors.
“This is about as metered and calm growth trend in the oil and gas industry as I have seen,” Posey said. “Usually we see the roller coaster, but people are buying steadily and reasonably.”
Oklahoma Manufacturing Alliance spokesman Joe Epperley read Wilkerson’s most recent survey and said anecdotally, his trade group members are seeing similar trends. The pace has picked up and optimism is growing compared to the same time the previous year, he said.
“We’re back to a level of consistency,” Epperley said. “That level of business is much lower than at the peak, before the bottom dropped out of the energy industry.
HSI Sensing is a great example of a manufacturer whose managers are smart to have a diversified customer base and whose workers are flexible enough to expand into new product types, Epperley said.
The Oklahoma Manufacturing Alliance’s staff encourages members to diversify, but much of the state’s manufacturing sector is either directly or indirectly tied to the oil industry.
Wilkerson said survey respondents said they expect more positive signs in their industry in the next six to 12 months.
About 80 people responded to the August survey, including business executives with manufacturing companies in the Kansas City’s seven-state region, which includes Colorado, Kansas, Nebraska, Oklahoma, Wyoming, and parts of Missouri and New Mexico. Oklahoma companies make up about 20 to 25 percent of all manufacturing activity in the region.