Local economy a little stronger according to Economist

GRAND RAPIDS — The West Michigan economy is a little stronger than it was last month, according to a Grand Valley State University economist.

Brian G. Long, director of Supply Management Research in the Seidman College of Business, surveyed local business leaders and his findings are based on data collected during the last two weeks of July.

The survey’s index of business improvement (new orders) rose modestly to +10 from +6. Likewise, the production index was up, advancing to +18, up from +11. The index of purchases had the biggest improvement for the month, jumping from -7 to +14. The employment index was slightly improved, edging from +12 to +14.

“Except for industries impacted by lower oil prices, the anecdotal comments from the survey participants are generally optimistic,” Long said.

Long said that locally, the office furniture business is stable with no problems on the horizon, and most firms are approaching capacity. However, there is evidence that local auto parts suppliers may be impacted by a topping out of the market for vehicles.

For Detroit car makers, a plateau appears likely, Long said. Ford sales declined 3 percent, GM slipped 1.9 percent, but Fiat Chrysler posted a 0.3 percent gain. Based on these numbers, Ford is projecting lower earnings for the rest of the year and announced a cost-cutting program, Long said, noting that suppliers would likely be asked to take part.

Overall, Long said that local, national and international purchasing surveys were all higher this month than the month before.

“The odds of sliding into a recession in the next few months have lessened considerably,” Long said.

Internationally, Long said that the Chinese economy, which has been negative for the past year and a half, appears to be on the mend, posting its first gains since February 2015.

“If these data are correct, we can take China off the ‘worry’ list for systemic problems that could upset the world economy,” Long said.

The Institute for Supply Management survey is a monthly survey of business conditions that includes 45 purchasing managers in the greater Grand Rapids area and 25 in Kalamazoo.

The respondents are from the region’s major industrial manufacturers, distributors and industrial service organizations. It is patterned after a nationwide survey conducted by the Institute for Supply Management. Each month, the respondents are asked to rate eight factors as “same,” “up” or “down.” An expanded version of this report can be found in the Dropbox link provided above under media note.

1831 Views

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.