GVSU economist: Growth resumes

The West Michigan economy is reflecting growth from the typical January "back to work mode," according to 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 below are based on data collected during the last two weeks of January. 

The survey's index of business improvement (new orders) has returned to a normal pace of +8, up from -5. The production index edged up to +8 from +3. The index of purchases rose to +6 from +3. The employment index dropped slightly to +6, down from +7. 

"Many of our industrial groups are showing signs of topping out, so growth for the first quarter in West Michigan will probably be just modestly positive," said Long. "The auto parts suppliers continue to raise concern over the recent softening in auto sales, but remain positive about the 2017 outlook. For the office furniture industry, most signs point toward sales topping out." 

Long said the January trend for capital equipment manufacturers was modestly positive. He said the strong housing market has fueled some significant growth for the tier one and tier two suppliers that survived the housing crisis. 

He added that some business leaders feel the post-election mood has resulted in a more optimistic outlook for 2017. "The biggest incentive for small businesses is the possibility of corporate tax rates being lowered by historical proportions," said Long. "The tax code has grown extremely complicated, and most small businesses aren't able to conglomerate all of the loopholes to reduce their tax rates below the statutory rate of 35 percent. Although the proposed 15 percent rate is probably not realistic, a rate of 20 percent is more likely." 

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.