Current business trends: modest growth continues

The West Michigan economy continues on a path of modest growth, although there is now a hint of caution in the air, 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; his findings are based on data collected during the last two weeks of February. 

The survey’s index of business improvement, called new orders, came in at +13, the same level as the previous two months. The employment index also remained unchanged at +19. Despite a few weather challenges, the production index edged up to +18 from +13. The index of purchases remained virtually unchanged at +16, down from +17. Long said the pattern of slow growth continues to move forward heading into the spring season.

“Many local industrial groups reported mixed results for February,” said Long. “The office furniture business remains positive, but sales in the middle of winter are seasonally slow. With auto sales still very positive, our automotive parts producers continue to be optimistic.”

Long said numbers for capital equipment firms have turned flat, and numbers for industrial distributors came in mixed.

He said rapid growth will be restrained by the sluggish world economy. “The European economy remains marginal, but recent strength in the German economy bodes well as far as avoiding a recession in the Eurozone, said Long. “The strong dollar continues to hurt our exports. Simultaneously, the strong dollar reduces the earning for our multinational companies.”

Long said many business leaders were worried about the negative impact of the West Coast dock strike and West Coast worker slowdown. “The entire supply chain was impaired by slow deliveries as well as the necessity to search for other sources of supply and other transportation modes,” he said. “At least one of our local firms was facing the possibility of shutting down for lack of materials. Fortunately, on February 23, West Coast dockworkers concluded a tentative agreement for a five-year contract. Although we don’t have to worry about a strike for another five years, some manufacturers are making long-term plans to ship through other ports.”

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.