Current Business Trends: Strong, But Moderating

Brian Long
Brian Long
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GRAND RAPIDS, Mich. — The greater Grand Rapids industrial economy is strong again, but moderating, according to the results of a monthly survey compiled by Brian G. Long, director of Supply Management Research in the Seidman College of Business at Grand Valley State University. 

The survey results are based on data collected in the last two weeks of June. The survey’s index of business improvement, called new orders, retreated to +32, down from +40.  In a similar move, the production index eased to +30 from +40. But the index of purchases rose to +36 from +27.  Perhaps the best news, Long said, comes from the index of employment, which set another four-year record at +36, up from +27.  [Audio clips available at bottom of story.]

Long noted that 46 percent of the firms in the survey are now adding staff in the form of callbacks, new temps from temp service companies, and new hires.  “All in all, our recovery remains on track,” he said. “However, it is worth reminding everyone that depressed commercial and residential construction, as well as the depressed pricing for all real estate, despite some recent improvements, will limit our recovery.”
 
The automotive industry is still leading the recovery, “but the pace has slowed just a little,” Long said. “Many auto assembly lines are now approaching capacity, which means that sales for some of our auto parts producers are topping out.” In other sectors, the industrial distributors continue to show strength and the office equipment and furniture industries continue to show modest signs of recovery. 

“Although several respondents are voicing concerns about the future, the mood is still upbeat,” Long said. “The pace of our recovery both here and around the world has slowed a little, but the pace remains positive. There are still parts of the economy such as residential and commercial construction that are causing us trouble, but most sectors are now getting back on track and profitable, even though the production levels of 2006 may still be many months away. 

Long cautioned that the unemployment level remains unacceptably high, but added: “Despite the rhetoric, there is very little that the politicians can do to fix this problem, except get out of the way and let the economy fix the economy.”

The Institute for Supply Management, Greater Grand Rapids 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 purchasing managers from the region's major industrial manufacturers, distributors, and industrial service organizations. It is patterned after a nationwide survey conduced 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 and details of the methodology used to compile it are available at www.gvsu.edu/scblogistics.

Call Brian J. Bowe at (616) 331-2221 or e-mail boweb@gvsu.edu to arrange interviews with Long. NOTE TO RADIO: downloadable audio bites are available below.

  • Long says numbers for June were strong but are moderating [AUDIO]
     
  • Long says growth will be slower but recovery will continue [AUDIO]
     
  • Long says the index of the employment set another four-year record [AUDIO]
     
  • Long says there was good news on inflation on the industrial level which is helping local companies [AUDIO]