Current Business Trends: Nice Increase

The greater Grand Rapids industrial economy is “nicely up,” 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.

The survey results are based on data collected during the last two weeks of February.

Both December and January were flat, but in February, things started to pick up. The survey’s index of business improvement, called new orders, came in at +16, up from the dead flat +0 in January. The production index shot up to +21 from January’s bearish -6. Activity in purchasing offices also turned back to positive at +12, up from -1. The employment index, which was already positive at +10, rose to +22.

“Looking at individual industrial groups, the auto parts suppliers remain positive, and some are busier due to production schedules being revised upward,” said Long. “Similar to last month, the capital equipment firms are still widely mixed, but some firms are reporting business to be picking up considerably. For industrial distributors, this month’s bias was to the up side, with no firms reporting downticks. Finally, the office furniture firms are still holding their own, but the market shows signs of topping out or stabilizing at the current level.” 

Long said states that have a big military presence may be affected by the “sequester” of $40 billion, but for West Michigan, it will probably be unnoticed. “The next two stumbling blocks on the calendar are more substantial than the sequester,” said Long. “On March 27, the ‘continuing resolution,’ which has kept the government going since the last real budget was passed in 2009, comes due. Just like it did in late 1995, failure to act could shut down non-essential functions of the federal government. If we get past that crisis, the next fight will be the May 18 deadline over the debt ceiling.” 

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.