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GVSU economist: November a strong month for West Michigan

  • Seidman College of Business

Posted on December 07, 2018

For the West Michigan industrial economy, September was strong, October was stronger and November was the best month of the year, said Brian G. Long, director of Supply Management Research in Grand Valley State University's Seidman College of Business.

Long surveyed local business leaders and his findings below are based on data collected during the last two weeks of November. See the full report here.

The survey's index of business improvement (new orders) edged higher to +38, from +36. The production index edged up to +33, from +30. The index of purchases rose to +36, from +32, and the employment index came in at +25, up slightly from +24.

Long said November’s bad news from the automotive sector came from General Motors; the company plans to close three plants associated with small car production and lay off 14,000 workers, presumably to get ahead of the predicted slump in auto sales for 2019. 

"Although auto sales continue to soften, our West Michigan auto parts suppliers continue to report positive business conditions and remain cautiously optimistic about the first half of 2019," he said. 

The 2017 tax incentives may have run their course for at least some of the capital equipment firms, Long said, and business conditions remain strong for most industrial distributors. 

He added that the office furniture industry is profitable at the current level, but the expansion for this phase of the business cycle for office furniture is apparently over. "The 'sugar high' for office furniture sales brought on by the 2017 tax reform package has now run its course," said Long. 

Looking forward, Long said unless trade talks with China break down, there is no apparent problem in the short term that will upset the economy for the first half of 2019. 

Other report highlights:

* Some firms are seeing falling prices for some key commodities. However, the tariffs are still being used as an excuse to raise prices.

* Year-over-year unemployment rates are still running about a full percentage point below a year ago.

* Hiring and retaining new workers continues to be a big problem for some firms, but with the current hesitancy in the economy, this problem may be receding.

* The European economy continues to slow. Not collapse, just slow. The Italian fiscal budget problem is not yet resolved, and could cause trouble for the other eurozone countries. 

* Mike Dunlap survey of the office furniture firms clearly depicts an industry that is topping out.

* Our two largest trading partners are Canada and Mexico. The Mexican PMI dipped to 49.7 in November, down from 50.7. However, the Canadian PMI upticked to 54.9 in November from September's 53.9.   

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.