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Business

Local economic activity brisk

| Tuesday, June 15, 2004

Economic activity in the Pittsburgh region reached its highest level in two years in May, including the beleagured manufacturing sector, which switched into a growth mode for the first time in 12 months, according to a survey of purchasing managers on Monday.

Companies reported that new orders and order backlogs increased last month, along with export orders.

The National Association of Purchasing Management-Pittsburgh's forward-looking index increased to 51.24 in May, compared with 51.20 the month before, and 51.04 in May 2003. An index level of 50 or higher is considered a strong economic showing.

It was the fourth month straight that survey respondents reported brisker business and the hiring of more people.

"A few manufacturers did say May was slower than April, but pretty much everybody else said business was up in May," said Dennis Richey, chairman of the Pittsburgh chapter's business survey committee.

The NAPM-Pittsburgh index of 51.24 was the highest since May 2002, when it reached 51.26.

But even with more orders, area businesses did not necessarily increase production runs or inventories last month. That seemed like an effort to hold down product supply in order to firm up prices so they can cover higher prices for raw materials.

"I got the sense companies were cutting back on production levels and cutting back on inventories to give them an opportunity to raise prices," said Richey, who also is president of Cranberry Purchasing Services and Consulting, Cranberry.

"Companies are getting hit with higher prices for steel and oil and gas," he said. "So if they just pump out product like normal, they won't be able to raise prices."

NAPM-Pittsburgh surveys about 20 member companies each month and asks whether they consider certain factors -- orders, employment, inventories and the like -- to be better, worse or unchanged from the month before.

Respondents reported higher costs for petroleum products, power supplies, metals, rubber and other unfinished goods. There were even spot shortages of steel and related products.

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