Current business trends are dead flat

The greater Grand Rapids industrial economy is “dead flat,” 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 during the last two weeks of January.

The survey’s index of business improvement, called new orders, came in at +0, down from +4. Following the slowdown trend, the production index flipped negative to -6, down from +11. Activity in purchasing offices also turned negative at -1, down from +11. The employment index remained modestly positive at +10, although down from +14.

“In contrast to the last few months, comments from local business representatives are more optimistic,” said Long. “Like last month, some firms are at full capacity, some are reporting all-time highs in sales, and some are very optimistic about 2013. Only two reports from the 71 firms in this month’s survey were seriously negative.”  

Long said he agrees with Mike Dunlop’s quarterly report on the furniture industry, which says the industry remains on a very steady, but flat trend line. He said the auto parts suppliers remain positive, but many local firms may be topping out.

At the national level, Long said reports were more positive than expected. After six consecutive modestly negative reports, the national index of new orders bounced to +7 from -7 and the production index also shot up to +6 from -4. The employment index rose from +0 to +5. “Much of the gain can be attributed to new export orders,” Long said. “Any way you look at it, January was a good month for the national industrial economy.”

Long said there are still two elephants in the room — the problems of the March 1 budget sequester and the debt ceiling, due to hit around March 20. “Right now, it appears the probability of a federal government shutdown is about 70 percent,” he said. “Over the long term, even the congressional budget office calls the current rate of spending ‘unsustainable.’”

The Institute for Supply Management 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 from the region’s major industrial manufacturers, distributors and industrial service organizations. It is patterned after a nationwide survey conducted by the Institute for Supply Management. Each month, the respondents are asked to rate eight factors as “same,” “up” or “down.” 
For more information, contact Brian Long at (269) 323-2359.