Several key manufacturing sectors in North Florida indicated notable contraction for July. It's the second month in a row some of those elements have seen a monthly drop.
The Jacksonville Economic Monitoring Survey, produced by the University of North Florida (UNF) Coggin College of Business, indicated some rough spots among manufacturers in the First Coast area last month. But Albert Loh, interim dean of the business school who oversees the analysis, said the Jacksonville area is still outperforming the national picture in terms of manufacturing.
Manufacturing output, new orders, new export orders and finished goods inventory all showed signs of contraction in July compared to June. Those sectors are considered some of the key indicators among manufacturers.
There are a total of 12 indicators measured in the UNF report, which taps local manufacturers through feedback in the survey, with results compiled by Loh and UNF researchers. One of the key positive indicators is employment, which expanded among North Florida manufacturers in July.
Still, the manufacturing output indicator dropped on the UNF scale from a 47 to 45, a clear sign of contraction in July in perhaps the hallmark production indicator.
"An index below 50 signals that a relatively greater proportion of companies are reporting a decline in production compared to the previous month. This suggests that manufacturers in Jacksonville are experiencing reduced output, possibly due to weaker demand, supply chain issues, or other economic factors," the UNF report concluded.
Loh noted that the contraction is a modest dropoff. But on the upside, First Coast manufacturers are outperforming national manufacturers. The national numbers showed a more substantial contraction in July.
"The fact that none of the six largest manufacturing sectors reported increased production underscores the widespread nature of this (national) downturn. Companies are significantly reducing output levels, driven by weak new order rates, declining backlog levels, and economic uncertainty that discourages investment in inventory," the report said.
A contraction in new orders among North Florida manufactures was a bit more modest than the drop in output. New orders fell in the UNF figures from 50 to 49 in July.
"An index just below 50 suggests that businesses are seeing a minor decrease in demand for their products compared to the previous month. While not severe, this contraction reflects underlying economic challenges that may be causing consumers and businesses to delay or reduce their orders," the analysis found.
Beyond expanding employment, First Coast manufactures also confirmed they had an uptick in backlog of work, referring orders and contracts they haven't been able to get to.
Loh acknowledged there was manufacturing contraction in general for North Florida businesses. But he said he's still optimistic the general manufacturing picture along the First Coast is on good footing.
"Despite the overall contraction, the Business Activity Outlook Index for the area was 53, indicating that local manufacturers are generally optimistic about growth over the next 12 months. This positive outlook is supported by companies' strategies to drive growth, such as increased spending on digital advertising, which has resulted in significant volume increases for some businesses," Loh said.
"Moreover, while the Jacksonville economy is facing some headwinds, such as slower supplier delivery times and cautious inventory management, these challenges are not as severe as those faced nationally. The local manufacturing sector appears to be more resilient, with businesses showing a proactive approach to managing costs and seeking growth opportunities."
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