Current Business Trends: Modest Recovery

Brian Long
Brian Long
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GRAND RAPIDS, Mich. — The greater Grand Rapids economy continues a pace of modest growth, according to the results of monthly a 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 in the last two weeks of January. The index of new orders, which tracks business improvement, eased to +14 from last month's +20. However, the production index rose to +22 from +14. The back-to-work mood of the post-Christmas season resulted in the index of purchases bouncing to +17, up from +0. The employment index slid back to +0, down from +8.

"All of this bodes well for a pattern of slow but steady growth, even though the pace of the recovery has slowed since the summer and early fall of 2009," Long said.

Long called the area's automotive parts suppliers "the undisputed stars" of this month's report. "Thanks to improved auto sales, these auto suppliers are starting to dig out of one of the worst slumps in recent history," he added. The office furniture business, on the other hand, appears to have taken a slight dip.

Long added that this month's biggest economic news came from the U.S. Commerce Department, which announced that the preliminary estimate for economic growth in the fourth quarter of 2009 came in at 5.7 percent, the highest expansion rate in six years. However, the same report noted that a whopping 3.4 percent of that figure was the result of halting inventory liquidation, or, conversely, rebuilding of depleted inventories at other points in the supply chain.

"Improving auto sales will help, but not nearly cure, Michigan's economy," Long said. "The growth in the national economy is very good news, and the recovery at the international level continues to outpace the U.S. economy. Barring catastrophic surprises, economic growth should easily continue."

The Institute for Supply Management, Greater Grand Rapids 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 purchasing managers from the region's major industrial manufacturers, distributors, and industrial service organizations. It is patterned after a nationwide survey conduced 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.

Call Brian J. Bowe at (616) 331-2221 or e-mail boweb@gvsu.edu to arrange interviews with Long. NOTE TO RADIO: downloadable audio bites are available below.

Audio Clips

  • Long says the modest growth seen in January is very good news (audio)
  • Long says we experienced an ideal level of growth in January (audio)
  • Long says the national economy is doing better than our local economy but we're just a small distance behind (audio)
  • Long says while the housing market has stabilized, we will still see more bankruptcies (audio)