Local economy returns to slow, steady growth

The greater Grand Rapids industrial economy eased to a slower pace in November, according to 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, remained positive at +16, but down from +26 reported last month. The production index came in at +12, lower than the +23 reported last month, and the employment index retreated to +16, down from +34 last month, but still expanding.

“The office furniture business continues to see stronger sales,” said Long. “Other industries reported mixed results. For instance, capital equipment firms generally came in strong, but two firms were hit by a considerable drop in new business coming in for 2015. The same scenario came from the industrial distributors, several of which reported brisk business but others blamed seasonal conditions for the slower pace. Any firm related to aerospace is holding its own. Auto parts producers generally remain strong, but several have noted the first downtick in business in several months.”

Long said Kent County now has the lowest (unadjusted) unemployment rate in the state at 4 percent. For the State of Michigan, the unadjusted rate now stands at 6.4 percent, considerably below the 8.2 percent rate for the same time in 2013. “The unemployment picture continues to improve, but we still have a gap to close before we can consider West Michigan to be back to full employment,” Long said.

Crude oil prices are down, and gasoline is selling for almost a dollar per gallon less than six months ago. Long said other commodities are also falling in price. “Iron ore is now about half the price of what it was just one year ago,” said Long. “Copper, lead, zinc, nickel and palladium are all 10-15 percent lower in price than just a few months ago. The fear is that wide-spread declines in commodity prices have preceded past recessions.”

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.