Data collected by a Grand Valley State University researcher shows that while the West Michigan economy posted another month of positive growth, signs are emerging that it is beginning to soften.
Brian Long, director of supply management research at GVSU’s Seidman College of Business, said his survey of the region’s purchasing managers and firms showed several key indicators trending downward.
“Much as we had hoped, our October survey of the industrial market in West Michigan remained positive, although some of our statistics weakened,” Long said.
Two of Long’s key metrics, new orders and production, slipped in October though remained in positive territory. Long noted that business and consumer confidence weakened, as well.
Fuel prices are affecting industrial markets and trickling down to consumers, Long said.
“Of course, the rising cost of gasoline affects the industrial market, but it's really the cost of diesel that affects the cost structure of most industrial firms,” Long said. “As the old saying goes, ‘If you bought it, a truck brought it,’ and three-fourths of Michigan's freight comes by truck. It’s going to take several months before petroleum prices really come back down.”
Long said the results of last week's midterm election could also influence trade relations between the United States and its allies, particularly Canada.
“Elections do have an impact on the industrial market, and what I'm hoping for is a softening of trade relations with Canada,” Long said. “Because of automotive, Michigan has probably been hit the hardest of all the states, largely because of the large amount of cross-border trading that has evolved starting with the North American Free Trade Agreement over 20 years ago.”
Here’s a look at the key index results from Long’s October survey of West Michigan purchasing managers:
- New orders index (business improvement): +9 vs. +18 in September
- Production index (output): +13 vs. +18 in September
- Employment index: +6 vs. +6 in September
- Lead times index: +47 vs. +30 in September
More information about the survey and an archive of past surveys are available on the Seidman College of Business website .
