Current Business Trends: Modestly Negative

The current word on the Greater Grand Rapids economy is still modestly negative. That’s according to the Greater Grand Rapids Association of Purchasing Management 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 third and fourth weeks of March. According to the survey, new orders remained at +0;  the production index also came back to +0, up from last month's modestly negative reading of -2.  But the employment index declined to -9 from +0.  The purchasing index sank  to -13, down from -8.  The index of lead times stretched to +13, up from +6. 

“In general, expanding lead times are not characteristic of a recession, but are typical for periods of rising prices,” Long said.  “All in all, even though the economy is still very slow, it is still good to see that things do not appear to be getting worse.”

There is much debate over whether the U.S. economy is in a recession. Long said his statistics indicate that the industrial sector of the economy is not yet in a recession, but that the news on the consumer side of the economy is not good.

“It is abundantly clear that we are in the midst of an economic slowdown, although it is still too soon to tell if it will really turn into a recession,” Long said. “The consumer economy is probably in a recession, but whether the industrial economy can remain strong enough to keep us out of a recession remains to be seen. The psychology for both the consumer and industrial markets has turned poor, and it is still possible that we may actually talk ourselves into a recession.”

The monthly survey of business conditions includes 45 purchasing managers in the Greater Grand Rapids 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 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 [email protected] to arrange interviews with Long.