Current Business Trends: Moderate growth returns

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The greater Grand Rapids industrial economy is again seeing moderate 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 in the last two weeks of June. The survey’s index of business improvement, called new orders, edged up to +23 from +17. The production index was unchanged at +26. The index of purchases rose modestly to +29 from +25. The employment index moderated to +34 from +45.

“Statistics indicate that we are on track for continued economic growth, even though the rate of growth may slow in the second half of the year,” said Long. “The local economy is now in its 23rd consecutive month of expansion, and it now appears the threat of a double-dip recession has passed.”   

Long said this month’s big economic news is the passage of Michigan’s new budget for FY 2012, which incorporates some of the biggest changes in taxation since the Hedley Amendment many years ago. “The complicated Michigan Business Tax has been replaced with a simplistic 6 percent flat rate tax on profits,” explained Long. “This means the total cost of business will now be reduced just enough to keep some firms in business or from seeking more favorable tax environments elsewhere. We should see some moderate improvement in the unemployment rate over the next couple of years.”  

Long said the office furniture sector remains fairly positive and schedule reductions for automotive parts producers resulting from the Japanese parts shortages appear to be over and conditions look positive going into the summer months. He also said industrial distributors came in fairly positive for the second month in a row.