According to the results of a survey taken in the last two weeks of February, the index of new orders (which tracks business improvement) came in at -20. While that is an improvement over last month's reading of -28 and the previous month’s -57, Long cautioned against becoming overly optimistic. “Negative is still negative, and at this time, we can only say that the rate of decline is lessening,” he said.
In other benchmarks, the production index moderated to -31, up from -38, as did the index of purchases, which edged up to -44 from -53. However, the index of employment posted a record low of -48, surpassing the previous record set in October 2001. “The same firms from last month that reported adding staff are still in a modest hiring mode, but they were more than offset by the larger number of firms that are reporting staff reductions,” Long said.
Long said the recently passed stimulus package will add some jobs to the local market for firms that build bridges and overpasses, pave highways, and maintain highways infrastructures. Firms that produce equipment for "green" energy equipment, such as wind turbines and solar panels, may receive some additional funding. “Unfortunately, even though the entire state will benefit, the additional new jobs will not begin to offset the job losses resulting from the declining automobile industry,” he said. “The stimulus package also includes numerous tax reductions, but since many Michigan firms are not paying taxes because of not making money, we cannot expect very much help from this part of the package.”
Long said the best news in the coming weeks would be a solid plan to reorganize General Motors and that the moderation trend of the last two reports will continue. “Let's hope that the most of the bad news is behind us,” he said.
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 .
AUDIO CLIPS
- Brian Long says the index of new orders (which tracks business improvement) for February improved slightly and the rate of decline is lessening(audio clip)
- Long says the stimulus package will create construction jobs for Michigan but that won't be very helpful (audio clip)
- Long says the one way Michigan would benefit is if General Motors has a solid reorganization plan (audio clip)
- Long says the stimulus package includes tax reductions but that won't help our state(audio clip)
