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South Jersey manufacturing continues to decline

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Production activity at South Jersey manufacturing firms fell for the fourth consecutive month in August, though firms can expect a slight uptick in demand for shipments next month, an economist said.

According to the Federal Reserve Bank of Philadelphia's Business Outlook survey, nearly 30 percent of South Jersey manufacturing firms indicated contraction in business activity through Aug. 14, exceeding the 22 percent reporting increases. The outlook for future activity deteriorated from July's report, though manufacturers still expect a boost in new orders over the next six months.

However, nearly 60 percent of manufacturing firms in the South Jersey region do not plan to hire through February 2013, and 77 percent of firms have held payrolls steady since mid-July. Statewide, manufacturing firms dropped a total of 3,000 jobs in July, according to the New Jersey Department of Labor and Workforce Development.

"During the recession, firms lost so much production and staff, and it's obvious they're still running below where they were at the end of the recession," said Michael Trebing, an economic analyst for the reserve. "We've seen some pickup over the last year, bringing them closer to prerecession levels, but unless demand starts to pick up stronger, we'll see evidence of caution in hiring — though that's true for all business right now."

Trebing said firms attribute decreasing demand and production activity to "the national issues we already know about," as well as uncertainty about future defense contracts and demand for materials for highway construction, which are tied to federal funds.

But Trebing noted more than 32 percent of the manufacturers surveyed had scheduled slowdowns or shutdowns during July and August, which had a more considerable effect on overall activity than economic factors, though the production decreases were not greater than the previous year's.

"We asked the firms if their production slowdown was much more severe this summer than in the past, but their answer was, 'No, not really, it's always this slow,'" Trebing said. "Historically, we see bounce backs in September, and many firms expect a pickup next month, though they're also suggesting they're not expecting a tidal wave of production."

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