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Current business trends: Slow growth returns

Posted on June 05, 2014

Growth returned to a slower pace for the greater Grand Rapids industrial economy in May, according to the results of a monthly survey compiled by Brian G. Long, director of Supply Management Research in the Seidman College of Business at Grand Valley State University.

The survey results are based on data collected during the last two weeks of May.

The survey’s index of business improvement, called new orders, retreated to +20, down from +40. In a similar move, the production index eased to +16 from +28. The employment index fared a little better and rose to +14 from +13. The index of purchases eased to +9, from +19.
“The local industrial distributors reported a strong month, although there were exceptions. The same held true for the automotive parts suppliers,” said Long. “The ‘integrated’ office furniture companies turned in a mixed performance for the month and capital equipment firms are well into the ‘decision’ season, and most are reporting very positive business conditions.”  

Long said the biggest news of the month is the passage of a new minimum wage bill. He said critics properly note that the increase will result in fewer people being hired and some workers in marginal industries will be let go. “The laws of economics cannot be defied,” Long explained. “Any increase in wages or salaries results in some increase in unemployment. For fast food workers in large chains, the impact will be negligible because the added wage cost can be added to the Big Mac. It is the small, independent firms that operate on slim margins that will feel the biggest pinch.”

Long added that the 18-25 age group will feel the biggest impact, both good and bad. He said the new wage rate will benefit some workers at the expense of others. And, at tax time, minimum wage workers will find the amount of “earned income credit” will be reduced and tax refunds will be correspondingly smaller.  

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.” An expanded version of this report and details of the methodology used to compile it are available at


* Long said the economy has returned to the slow pace maintained for the last five years (audio).

* Long said unemployment continues to improve partly because of new found optimism (audio).

* Long said the housing market has turned around (audio).

* Long said for the first time, the minimum wage law has a built-in cost escalator (audio).

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