Sun shining behind Seidman College of Business building at Grand Valley State University

Purchasing managers survey continues to show slowdown

GRAND RAPIDS, Michigan – Strong hiring trends, lower commodity prices and high demand for automobiles continue to buoy the Michigan economy even as other indicators signal an economic slowdown.

That’s the conclusion of the August purchasing managers survey for the Institute for Supply Management released Sept. 6 by Grand Valley State University’s Seidman College of Business.

Brian Long, director of supply management research at GVSU, said this month’s survey serves as yet another mixed bag with respondents from local manufacturers taking business on a day-to-day basis.

“Locally, we certainly have some indications that our economy is beginning to slow, but we do not yet have evidence that we are now or are about to enter a recession,” said Long, who has been conducting the survey of West Michigan businesses for more than 28 years. “However, if our index of new orders continues to slide, we're going to have to reassess our position.”

Some key findings from this months survey include:

  • The new orders/sales index in August slipped to -5 from -3 in August, indicating a further erosion in sales among those surveyed
  • The survey’s production index saw a positive swing from +7 to +17, as did the long-term business outlook index, which rose to +28 from +12.
  • The short-term business outlook index also swung back into positive territory during August, going from -2 in July to +2.

Long said commodity prices for key industrial supplies like copper, some forms of steel, lead, zinc and oil continued dramatic declines, but those decreases typically do not translate into near-term changes in the retail market, where prices remain elevated.

“Industrial deflation does not easily spill over to the consumer market,” Long said. “So the Federal Reserve is still going to have to raise interest rates considerably to control consumer inflation.”