Local business trends return to modest growth

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The greater Grand Rapids industrial economy has returned to experiencing modest growth, according to the results of a monthly survey compiled by Brian G. Long, director of Supply Management Research in the Seidman College of Business at Grand Valley State University. 

The survey results are based on data collected during the last two weeks of November. The survey’s index of business improvement, called new orders, rose significantly to +17, from +6. In a similar move, the production index jumped to +21, up from -1. Activity in purchasing offices came back to +8, up from -7. The employment index modestly improved to +13, up from +4.

“This month’s statistics clearly bucked the trend,” said Long. “For the last four years, our local economy has often been stronger than either the national or international economies, and this month’s report is no exception.”

Long said auto parts suppliers remain positive and firms supporting lines of smaller cars are continuing to do better than those supporting large SUVs and trucks. “This month’s statistics were also bolstered by the recent uptick in the office furniture business, which has resulted in several firms ending the year much better that expected,” said Long. “For industrial distributors, this month’s performance came in mixed, although the bias was clearly to the upside.”

Long is also following the debate over the “fiscal cliff,” a dilemma involving $600 billion in spending cuts and tax increases that are set to automatically be triggered if a budget solution cannot be reached by January 1.

“There is now a movement brewing that some legislators would like to see us go over the fiscal cliff in order to secure a huge de-facto tax increase and a huge reduction in defense spending,” he said. “Some legislators feel these goals cannot otherwise be achieved for many years. They are willing to risk a recession and the loss of jobs for 3.4 million people in order to accomplish these goals, and suggest new-found revenue be used to provide extensive benefits for the newly unemployed.”

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 and details of the methodology used to compile it are available at www.gvsu.edu/scblogistics.

For more information, contact Brian Long at (269) 323-2359.

DOWNLOADABLE AUDIO

* Long said the numbers for November were a bit surprising (audio).

* Long said new orders showed an impressive increase (audio).

* Long said the office furniture industry helped boost numbers for November (audio).

* Long said he believes the fiscal cliff could go either way (audio).