Current Business Trends: Growth Rate Improves

GRAND RAPIDS, Mich. — The greater Grand Rapids economy's growth rate has improved, 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 March. The new orders index, which tracks business improvement, advanced to +20, up from last month's +6. The production index surged to +30, up from last month's +8. The index of purchases edged up to +17, up from +14. For the second month in a row, the best news for the month came from the employment index, which jumped to +17 — a significant improvement from last month's +9.  

"A quarter of the respondents reported adding staff over this past month, either in form of callbacks, temps, or new hires," Long said. "All in all, our greater Grand Rapids statistics have now been positive for a full year. There is no evidence at this time to suggest any fundamental new problems, but the recovery will probably be restrained as we roll toward the summer months."

Long added that there are reports of better business conditions from across sectors, including local auto parts producers, office furniture firms and industrial distributors. For capital equipment firms, though, conditions remain modestly negative. "Some firms are still cautiously optimistic about the future. Most firms are holding their own, and a couple are rather enthusiastic," Long said.  

While the economic picture is increasingly rosy, Long noted that the recovery will still be slow.

"Almost from the time that the recovery began, there has been talk about the possibility of a double dip recession," Long said.  "While a double dip is possible, it is not probable. But growth throughout the summer will be inhibited by a weak construction sector, higher interest rates, the end of the $8,000 home incentive, and low consumer confidence. Also, because we are dependent on China and other creditor nations to continue to buy our ever-growing treasury debt, if we get into any kind of a currency war or trade war with China, this could start generate a second down leg to the recession."

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 [email protected] to arrange interviews with Long.