The monthly mantra of “slow growth, slow growth” in the West Michigan Industrial Economy has taken a decided turn north and become “faster growth,” as a strong pace continues. That’s the latest assessment from the man behind the numbers, Dr. Brian Long, Director of Supply Chain Management Research at Grand Valley State University near Grand Rapids.
The professor routinely queries manufacturers, supply chain providers, HR people and beyond to gather a routine snapshot of the state of the West Michigan industrial economy, and his report for the month of May, from data collected over the last two weeks of the month exhibits faster growth and a strong pace for the market headed into the summer season.
Professor Long’s most watched measure, his New Orders Index of business improvement checks in at +30, up slightly from April’s +28. Meanwhile, his Production Index “Fared even better and rose nicely to +37 from +28.”
Long’s latest measurement from the purchasing offices in the region, his Purchasing Index remained positive, “But eased considerably to +19 from +34 for no apparent reason.” Long adds, “The comments from our survey participants remain cautiously optimistic, but many are justifiably concerned about an impending tariff war. Just as last month, personnel shortages continue to plague many firms with no end in sight.”
As the professor turns his attention to individual industries, he notes that the rally among most local capital equipment firms is still continuing, “Largely because of the recently-passed tax advantages for new capital investments.”
Elsewhere he reports that automotive parts producers are still somewhat cautious, adding, “Most are adjusting to the new market for fewer sedans and more SUVs.” As for the office furniture industry, Long simply reports things are “steady.” He also notes that most industrial distributors reported a good month, “Which,” he says, “is typical for this time of year.”
In turning attention to the latest numbers reported by Michigan’s Department of Technology, Management and Budget, Long says they have pegged Michigan’s seasonally adjusted unemployment rate for April at 4.7-percent, “Unchanged for the previous month but higher than the 4.4 reading from a year ago.” He contends that, “In general, the higher unemployment numbers both locally and statewide are the result of idle workers reentering the workforce.”
The West Michigan Employment Index jumped to +32, up from +23, and that draws close to a seven year high for that measure. Long continues to bemoan the fact that, “There are not enough local people to fill the openings, so many firms are using the internet to draw talent from near and far.”
Not all of the news is as rosy, however. Professor Long says, “If there is a negative aspect to this month’s report, this is it. The West Michigan index for the Short-Term Business Outlook for May, which asks local firms about the perception for the next three to six months, eased modestly to +33 from +35. But the Long-Term Business Outlook, which queries the perception for the next three five years, posted the biggest drop recorded since we began collecting data five years ago. Fear of a trade war continues to weigh heavily on the minds of some survey respondents as well as the continued escalation of the prices of many key commodities.”
As is tradition, Long shares anonymous, verbatim, anecdotal comments from some of the survey participants. Here are some of those he has shared in his May report:
- “We’re very afraid of steel and aluminum allocations. Our steel quota from Korea is already met for the year.”
- “Business is good. We’re waiting to see what the final impact of the tariffs are.”
- “The industry I work in is currently in the yearly lull for work but is estimated to ramp up quickly in mid-July”
- “April was up nicely over March. May is lagging behind April, but we still have a week to go to get a big push.”
- “We’re still doing very well in the OEM world. Unemployment rates are unbelievably low!”
- “We’re waiting to understand the impact of the potential Chinese tariffs.”
- “We’re finally hiring some new job candidates but having to take those with less experience and commit to training them.”
- “We have seen prices for just about everything go on the ‘up’ side.”
- “We were a little slow in April but have rebounded in May.”
- “Automotive business has been flat, i.e., down for cars but offset by SUV and cross over platforms.”
- “We are getting busy.”
- “It seems like price increases are a common thing in this economy.’”
- “The new business we’re into just took off, so everything is up for us.”
- “All is steady”
- “The tight labor market presents additional challenges in meeting rapidly growing customer demand.”
- “Lack of transportation is causing longer lead times and increased prices.”
- “The very robust business climate continues.”
- “Some of our business units are up and some are flat. Overall, our business is up.”
- “We are seeing steadily rising prices for raw materials.”
You can read Long’s entire report and see his graph updates by clicking the link below:
