Manufacturing firms in southern New Jersey face decreased demand for new orders and shipments, according to a July survey by the Federal Reserve Bank of Philadelphia that reported a third consecutive monthly decline in regional business activity.
According to the Business Outlook survey, nearly 32 percent of firms noted declines in overall activity through July 17, surpassing the 19 percent reporting increases.
While the outlook for future business activity was more moderate than June's report, firms anticipate a rebound in the manufacturing sector over the next six months.
However, since January's survey reported the highest levels of optimism for demand through July, Michael Trebing, a senior economic analyst for the reserve, said six-month indicators are "not as great of a forecasting tool."
"We do look at the numbers to see if optimism is there, and it has deteriorated dramatically, with the changes in growth in the first quarter and second quarter," Trebing said. "But going forward, firms believe conditions are improving, and they expect business activity to be level in the next three months."
While more than half of firms attributed stagnating demand to increased uncertainty about the economy, future tax rates and government regulation, 22 percent cited a slowdown in export demand.
Trebing said one positive sign is that the production price index increased in July after holding steady for the past few months, which he said has been "helping firms on the profit side."
But increases in profits have not yet translated into more hiring, as the number of firms reporting decreases in employment continues to exceed those creating jobs. Still, businesses expecting to increase employment over the next six months outnumbered those that plan to lay off workers.
Statewide, manufacturing firms shed a total of 2,400 jobs in June and 1,200 jobs in May, according to the New Jersey Department of Labor and Workforce Development.