Current business trends: economic growth slows

Economic growth in West Michigan paused for the late summer season, according to Brian G. Long, director of Supply Management Research in the Seidman College of Business at Grand Valley State University.

Long surveyed local business leaders and his findings are based on data collected during the last two weeks of August. The full report can be viewed here.

The survey's index of business improvement, called new orders, remained positive but backtracked to +5, down significantly from July's +22. The employment index fell to +7 from +25. The production index eased to +3 from +26, and the index of purchases eased modestly to +12 from +14.

Long said the six-year pattern of slow growth continues on track, but many economists are concerned about China.

"The China Purchasing Manager's report for August was the catalyst for the stock market sell-off panic over the past few days," said Long. "Just like most PMI surveys, any number in the diffusion index below the break-even point of 50 is considered to be negative, and the current slide to 47.1 is the lowest the index has been since 2009. This report is especially telling because even the Chinese agree that the success of their economy is almost exclusively attributed to manufacturing and export." 

Long said some of the drop in new orders domestically may be attributed to the slow worldwide growth and recessions in countries like Russia, Turkey and Brazil. He said the U.S. economy continues to flatten and the slower rate of growth will eventually impact Michigan.

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." 

For more information, contact Brian Long at (269) 323-2359.