Three key indices in a closely watched survey of West Michigan purchasing managers turned sharply negative in December, closing out 2022 on a decidedly downward trend that aligns with national economic surveys.
Survey leader Brian Long, director of supply management research at Grand Valley’s Seidman College of Business, said he expects the National Bureau of Economic Research and other economists to declare a “mild recession” over the next few months. In previous months, Long indicated West Michigan is already in a mild recession by some measures.
The Current Business Trends survey showed its purchasing index reaching a 30-month low as reports on new orders and production also slid.
Long said he isn’t worried about an economic meltdown.
“I've called previous reports flat or modestly negative, but this report is significantly negative,” he said. “That said, I still don't expect to collapse like we had at the onset of the Great Recession or the recent pandemic recession.”
The same survey’s employment index, though sliding lower, remained in positive territory, indicating a reticence to layoff or furlough employees that manufacturers have struggled to attract, Long said.
“Despite all the talk about a possible recession, it appears that some firms are continuing to backfill some of their open positions, and others are just plain reluctant to begin laying off any part of a workforce that they've worked so hard to build over the last two years of tight labor markets,” he said.
Office furniture orders remain soft as employers continue to retrench and assess their office needs, Long said.
But the survey showed automotive suppliers are still showing fairly healthy orders as they work through a backlog of orders and supply chains are finally showing signs of returning to pre-pandemic normalcy.
Here’s a look at the year-end key index results from December’s survey of West Michigan manufacturers:
- New orders index (business improvement): -24 versus -2 in November
- Production index (aka “output”): -10 versus +7 in November
- Employment index: +14 versus +20 in November
- Lead times index: -14 versus -5 in November
More information about the survey and an archive of past surveys are available on Seidman’s website.