The index of new orders, which tracks business improvement, moderated to -5, up from last month's -20 and a marked improvement from the -57 registered in December. Similarly, the production index was -7, an improvement over last month's -31. The purchases index moved to -42 from last month's -44. The employment index rebounded to -27, up from last month's record low of -48.
"All in all, our statistics are still negative, but the sharp rate of decline has subsided substantially," Long said. "Although the worst may be over, the road to recovery may still be very long."
Long said the biggest weak spot in the regional economy remains the automotive industry, but that companies dealing in capital equipment and office furniture are also generally lower. "Among all of the industries, there are some firms that are showing signs of stabilization, albeit at a lower level of sales and production considerably lower than just a year ago," he said.
But the clouds looming over the auto industry are the most troubling. "We may have a long wait for good news in the auto industry," Long said. "Unlike the sales statistics of a few months ago, Honda and Toyota are losing sales almost as fast as the Detroit three. In automotive, there is almost no place to hide."
But conditions seem most dire for General Motors and Chrysler, both of which seem more likely to file for bankruptcy, which spells hard times for Michigan. "Call it bankruptcy or call it reorganization, we are still going to lose more automotive jobs in Michigan over the next year or two," Long said. "The current unemployment rate in Michigan is 12 percent, and our previous estimate that unemployment in Michigan may go as high as 18 percent appears more likely."
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 [email protected] to arrange interviews with Long.
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