Current business trends: Slow growth returns
Growth returned to a slower pace for the greater Grand Rapids
industrial economy in May, 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 May.
The survey’s index of business improvement, called new orders,
retreated to +20, down from +40. In a similar move, the production
index eased to +16 from +28. The employment index fared a little
better and rose to +14 from +13. The index of purchases eased to +9,
from +19.
“The local industrial distributors reported a
strong month, although there were exceptions. The same held true for
the automotive parts suppliers,” said Long. “The ‘integrated’ office
furniture companies turned in a mixed performance for the month and
capital equipment firms are well into the ‘decision’ season, and most
are reporting very positive business conditions.”
Long said the biggest news of the month is the passage of a new
minimum wage bill. He said critics properly note that the increase
will result in fewer people being hired and some workers in marginal
industries will be let go. “The laws of economics cannot be defied,”
Long explained. “Any increase in wages or salaries results in some
increase in unemployment. For fast food workers in large chains, the
impact will be negligible because the added wage cost can be added to
the Big Mac. It is the small, independent firms that operate on slim
margins that will feel the biggest pinch.”
Long added that the 18-25 age group will feel the biggest impact,
both good and bad. He said the new wage rate will benefit some workers
at the expense of others. And, at tax time, minimum wage workers will
find the amount of “earned income credit” will be reduced and tax
refunds will be correspondingly smaller.
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.”
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