The industrial market in West Michigan remained “marginally negative” during November, but some key indicators recovered lost ground, according to a survey of West Michigan manufacturers by Grand Valley’s Seidman College of Business.
Employment and gross output (production) indices showed improvement from the October survey, which Brian Long, director of supply chain management research at Seidman, said may point to a more mild recession in the year to come.
The bigger concern at this point, Long said, is how the Federal Reserve Bank will react to stem inflation without further harm to the economy.
“I still think we'll roll into a recession sometime in 2023, and I agree with the other forecasters that the recession will probably be quite mild,” Long said. “That's the good news. The bad news is that a mild recession will make it harder for the Fed to rein in inflation. I fear that we could get into another one of these wage-price spirals and that the result could be inflation staying unacceptably high for the next five years or even longer if the Fed does not take decisive action.”
Long forecasted a slowdown in the housing market, which he says is in a bubble that needs to burst in order to bring down inflation.
“About 40 percent of the consumer price index is the cost of owning, renting and otherwise operating a home,” Long said. “So we’re going to need to see the prices for homes come back down to normal before we're going to see inflation come back to normal.”
Here’s a look at key indices from the survey of West Michigan manufacturers in November:
- Sales: -2 (up from -12 in October)
- Production: +7 (up from +5 in October)
- Employment: +20 (up from -2 in October)
- Purchases: -2 (up from -12 in October)
- Short-term business outlook: -22 (down from -14 in October)
- Long-term business outlook: +22 (up from +5 in October)
The entire December report and an archive of past reports are available from Seidman’s Purchasing Manager's Index Survey website.
