The brief consternation over the West Michigan industrial economy voiced by Professor Brian Long has abated and his latest report reflects gratification that “the local economy is again gaining strength.” That’s the quick snapshot provided by Long who is the Director of Supply Chain Management Research at Grand Valley State University in Grand Rapids.
Long had voiced his concerns when the industrial economy in West Michigan softened at the end of 2015, and then remained a bit light at the beginning of the first quarter. That was an unexpected turn, however, he says his just compiled survey results from the regular monthly research he conducts show that “the upturn continues.”
Long says the data and anecdotal comments collected over the last two weeks of March 2016 “appear to be paralleling the post-holiday growth we reported last month.”
Long’s all important barometer of the New Orders Index, reflecting business improvement, rose to a reading of +15, up incrementally from +14 a month earlier. His Production Index also advanced higher to a +16 reading from February’s +12.
Long says activity in the Purchase Index turned back to a positive reading of +3, up from the -3 a month earlier, and he contends that the West Michigan economy “continues to outpace the national economy as well as the overall Michigan economy,” as the pattern of slow growth has returned to the region.
When Long places individual market sectors under the microscope, strong auto sales are still keeping local auto parts manufacturers and suppliers humming. He says that although a couple of firms reported “a slight hesitation,” most firms were very positive. His reflection on the office furniture sector “remains stable, and some of the specialty firms are reporting an unexpected upturn.” He characterizes industrial distributors as “generally positive, however, capital equipment firms reported widely mixed results.”
Dr. Long surveys multiple firms across several key manufacturing sectors on a regular monthly basis in order to capture the state of the industrial economy in West Michigan from his perch at Grand Valley State.
In the Business Outlook portion of his survey, Long says, “Many of our survey participants remain fairly optimistic about 2016, and this month’s survey reflects a much more positive attitude than last month.” He tells us the biggest gain came in the Short Term Business Outlook which queries perceptions of the next 3 to 6-months. Citing improved sales and less worry about the direction of the world economy, the Short Term Business Outlook Index rose to +37, up considerably from February’s reading of +19, and “significantly higher than the +4 reported last October.”
When you advance the scale to a 3 to 5-year crystal ball, Long’s Long Term Business Outlook Index rose to +44 from +40 a month earlier. Long says, “Although the long-term index is well below the +60 recorded two years ago, the mood is still clearly positive.”
Long concludes his commentary by saying, “In summary, the purchasing manager’s reports at the local, national, and international levels have turned more positive over the past month. Commodity prices have apparently bottomed out, which will hopefully allow business conditions for these industries to stabilize. Some of the economic news coming out of China has helped to relieve the world’s anxiety about a possible recession. We hope all of these current trends will continue.”
As is routine for Long’s monthly survey, we share now some anecdotal comments taking verbatim from the survey instrument here:
- “The U.S. economy seems to be in an unusual or precarious position right now. Which way is it going to go?”
- “Construction season is ready to begin as soon as weight restrictions are lifted. There is already an indication that trucking — and the lack thereof — will be an issue.”
- “We have seen a few price increases on component parts over the last couple of months.”
- “Overall, the business environment remains stable. The automotive sector remains strong, but oil and gas are weak. There is talk of a rebound in the aerospace sector.”
- “Business is very good, and quotes are very strong.”
- “After January and February came in better than forecast, March has been soft.”
- “We are about 2.5-percent off from the same time last year. However, business looks better later this month and into the spring and summer.”
- “Automotive industry is still carrying us to strong financial performance.”
- “We are forecasting a down first quarter, but see a pickup in the third quarter.”
- “We’ve been very slow the last four weeks. Others in our industry seem to be following suit. Will it stay like this until we elect someone that the majority of the people don’t like?”
You can see Long’s full report by clicking the link below:
