Consumer confidence, purchases and new orders all rose in February, likely boosted by the sharp decline in the number of positive COVID-19 cases in West Michigan and the nation, according to Brian G. Long, director of Supply Management Research in the Seidman College of Business.
Yet, Long said, February's numbers were collected before Russia invaded Ukraine. "Now, all bets are off," he said.
Long said, historically, military conflicts have boosted industrial economies. "In West Michigan, it means there will be a pickup in practically every thing that we do because we supply the supply chains around the world. The downside is that the price of many commodities has skyrocketed in the past few days, and companies are going to question their profitability."
Highlights from Long's report are listed below:
- New orders in February rose to +28, over January's index of +18;
- Production in February rose slightly to +16; it was +15 in January;
- The employment index was +26, over January's index of +13;
- Purchases in February rose to +24, over January's index of +13.
Long said restrictions placed on Russia's export of raw materials, like oil and aluminum, plus rice and wheat, will impact global markets and supply chains. This includes production of electric vehicles, he said.
"It will impact our economy from basically the cost of all of the things we import, and will continue to import. Right now, prices are going up dramatically and that will put a crimp on most of our industrial markets," he said.
Long also said the Consumer Price Index will continue to rise, which will likely force the Federal Reserve to raise interest rates to slow inflation.
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."
