GVSU economist: Local economy remains strong

Despite concerns about decreasing auto sales, the West Michigan economy is still strong, a Grand Valley State University economist said.

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 May. 

The survey's index of business improvement (new orders) came in at +27, a little below last month's two-year high of +35. The production index remained positive, but backtracked to +19 from +29. The index of purchases remained virtually unchanged at +24, while the employment index dropped to +13 from +26. See the full report here.

Long said new car inventories on dealer lots have now swollen to a 90-day supply, well above the ideal level of 60 days.

"July and August used to be months for a production hiatus called 'model changeover' for the auto industry, but hot-selling brands in today’s market have often limited the production pause to a few days," Long explained. "For auto lines that are not selling well, the hiatus has now been used to balance dealer inventories. In a couple of months, some assembly lines may go down for as much as three weeks, potentially resulting in additional shutdowns in the supply chain here in West Michigan." 

Long said there is no sign of an inventory bulge in the office furniture business, and many local firms expect the second half of 2017 to be nearly as good as the first half. 

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.