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ORANGE COUNTY, CA-The county’s manufacturing sector has suffered gravely from the September 11th attacks and will probably not recover until sometime next year, according to recently released research by Chapman University economists.

The university’s Composite Index, which is used to measure activity in the county’s manufacturing sector, has fallen to its worst level in a decade. The index dived sharply from 45.8 in the second quarter of 2001 to 38.0 in the third quarter. “This fall indicates that the manufacturing economy of the county has deteriorated substantially since the events of September 11,” the Chapman report states.

Prior to the attacks, economists were expecting a continuance of the positive performance set forth in the second quarter. “Activity really stabilized in the second quarter and the expectation was that it would be the same or better in the third quarter,” says Raymond Sfeir, a Chapman University professor who headed the study. “Things were really derailed by the events of September 11.”

The slowdown is expected to continue into the fourth quarter, Sfeir adds. “We are not expecting any major turnaround by the end of the year.”

The county’s commercial real estate sector has already begun to feel the effects of the manufacturing slowdown, as industrial occupancy levels here are on the rise. The North County overall vacancy rate jumped from 2.6% in the second quarter of 2001 to 4.7% in the third quarter, while the South County vacancy level increased from 6.4% in the second quarter to 8% in the third quarter, according to research by Cushman & Wakefield. Vacancy rates also crept up in the Greater Airport Area, from 5.1% in the second quarter to 6.5% in the third quarter, the report says.

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