After four months of a gut-wrenching decline, the West Michigan industrial economy has returned to positive territory, for now, said Brian G. Long, director of Supply Management Research in Grand Valley State University's Seidman College of Business.
Long said the outlook is good for the real estate market, home values and fast food outlets.
Long surveyed local business leaders and his findings below are based on data collected during the last two weeks of July.
The survey's index of business improvement (new orders) came in at +12, considerably better than the -7 reported last month. In a similar move, the production index rallied to +14 from -11. The index of purchases bounced to +10 from -13, and the employment index rose to -4 from -13.
Long said West Michigan manufacturing firms are gradually resuming "modified" normal operations, although some are still hampered by disrupted supply chains and shipping bottlenecks.
He said many office furniture customers are currently reevaluating office configurations from a social distancing perspective. "Some office furniture firms have partially transitioned into the medical furniture business, but readjustment for this industry may be slow," said Long.
Automotive suppliers may suffer some temporary setbacks, but Long said reshoring may provide new opportunities, given that many local firms have proven themselves to be world competitive. And, unlike the previous recession, Long said the residential real estate market has not collapsed, and the housing valuations in some areas of the county are actually rising.
Long added sit-down restaurants have been hardest hit, and returning to normal will be very slow for those that survive.
"The restaurant take-out business has soared, but not enough to make up for the lost sit-down sales in traditional restaurants," he said. "Some fast food outlets have actually seen increases in business because of the popularity of drive-thru window service. With more people eating at home, the grocery business is booming, and the grocery delivery segment has more than doubled. Many changes like this are likely here to stay."
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) 870-0428.
