Oct. 2--Slow production, not enough orders and few employment opportunities continued to drag down the pace at Inland Southern California's factories in September, a report released Thursday indicates.

The Purchasing Managers Index for San Bernardino and Riverside counties increased slightly last month, to 43.5 from 42.8 in August, the Institute of Applied Research at Cal State San Bernardino reported. The index has been below 50, the indicating that manufacturing is shrinking in the two-county area, for the last two months.

The national index, reported Thursday by the Institute for Supply Management, a Tempe, Ariz.,-based trade group, fell slightly in September to 52.6 from 52.9 in August. Analysts in two separate media surveys had expected a national reading of 54.

Economists who watch the Inland area had been hopeful when the PMI came in above 50 in May, June and July, because three consecutive months on either side of that level signals that trend is in play.

"It is very much in flux right now," said Barbara Sirotnik, co-director of the Cal State institute. "There are so many variables to the economy, it's hard to say where it's going."

Some economists had guessed that the rally that began in late spring was keyed by companies up and down the supply chain that, after months of dealing off existing inventories, had to go back to producing to restock their shelves.

Despite the three months of higher survey results, there was no increase in employment at Inland factories. The state Employment Development Department reported 93,100 manufacturing jobs for Inland residents in August, the most recent month for which there is data. That's 800 fewer jobs than in July and 12.2 percent fewer than August 2008.

Terry Herrmann, director of materials for PneuDraulics Inc., a Rancho Cucamonga firm that makes aircraft components, said the company is holding its own and expects little change in the foreseeable future. The company is doing about 35 percent less business than last year and has laid off roughly a third of its work force, he said.

Herrmann said he's not expecting much improvement until the fourth quarter of 2010. Private plane manufacturer Cessna is one of PneuDraulics' biggest customers.

"It'll take about that long for our major customers to burn off inventory," Herrmann said "Some of them had nine months of product on the shelves, but if their sales drop off, the nine months becomes 18."

Some manufacturers are getting creative by exploring overseas markets. Big Bear Choppers, a 10-year-old Big Bear Lake firm that makes custom motorcycles, is still producing, but its products are going to places such as Europe, the Middle East and Canada, said Marcos Quesada, materials manager.

The cycles are priced between $17,000 and $25,000, and the recession is keeping most domestic buyers at home, Quesada said.

"I'd say 85 percent of our business now is international," Quesada said. "Things are panning out pretty good, which is keeping us working."

Nancy D. Sidhu, chief economist for the Los Angeles County Economic Development Corp., said eventually inventories will be worked down again. But she reminded manufacturers that the economy is still "in a deep hole." Creative companies such as Big Bear Choppers will have better survival odds.

"Manufacturers who can't find customers at home are going to have to scratch around," Sidhu said.

Bloomberg News and the Associated Press contributed to this report.

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