GVSU expert: West Michigan economic recovery slows
Although still positive, the recovery for the West Michigan industrial economy has slowed considerably in recent weeks, according to Brian G. Long, director of Supply Management Research in the Seidman College of Business at Grand Valley.
Long said the slowdown is expected at this stage of an economic recovery because of pent-up demand. His full report can be found here.
Long said the worldwide chip shortage is hampering auto production for almost every nameplate in the world. Dealer lots are predominately empty and Long said it may be 2022 before supply catches up with demand.
Highlights from Long’s economic report:
- New orders, the index of business improvement, came in at +14 – typical of the recovery from most recessions once the initial pent-up demand has been satisfied.
- The on-going chip shortage has washed backward into the automotive supply chain, causing slowdowns or temporary stoppages in production. The production index tapered to +11.
- Staffing continues to be a major problem for many firms, even though some have raised their starting wage and offered signing bonuses. Many economists are concerned about a wage-price spiral.
- Despite the Covid Delta Variant, the JPM international survey posted at 54.1, only a little below the all-time high of 56 set in May. The supply chains of the world continue to show no sign of returning to normal.
- The employment index remained positive at +19, but would be stronger if there were people to hire. With some of the generous unemployment benefits coming off line, there is speculation that the employment situation will improve in coming months.
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) 870-0428.