Business trends: Local economy is flat

The West Michigan economy is flat and has turned slightly negative, according to a report by a Grand Valley State University economist. 

Brian G. Long, director of Supply Management Research in the Seidman College of Business, surveyed local business leaders and his findings are based on data collected during the last two weeks of December. 

See full report here.

The employment index is the bright spot, which remained positive at +12. The survey's index of business improvement (new orders) edged lower to -1 from +7. The production index softened to -4 from +3, and the index of purchases eased to -4 from +5. 

"December is often a month of slower sales and reduced production sales because of the holidays, so there is no cause for alarm," said Long. "The West Michigan economy continues to outpace the national economy, and many local firms are fairly optimistic about 2016 — at least as they see it now." 

Long said auto parts manufacturing, office furniture and aerospace remain stable, but are now at their peak. 

"Because of strong auto sales, some of our auto parts suppliers remain at full capacity," said Long. "The office furniture business has turned mixed, and some firms are less optimistic about 2016. Many of our firms associated with capital equipment are beginning to complain about the below-cost equipment being dumped on the market by Japanese, Korean and Chinese manufacturers because of the weaker international markets." 

The auto industry set a record for the largest number of automobiles ever sold in one year. In 2015, Ford recorded a 8.3 percent increase, GM 5.7 percent and Fiat Chrysler 12.3 percent. "These numbers are for both cars and light trucks, so it should be noted that all of the gain was from the truck and SUV sector, not from the sales of cars alone. We can give credit to cheaper gas prices for a good portion of this gain," Long said.

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 can be found in the dropbox link provided above under media note.

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