3395908

West Michigan Economy Still Rising

3395908

Grand Valley State University Professor Brian Long says that any fear of an immediate recession continues to fade despite ongoing core problems. His latest report on the industrial economy in West Michigan pegs the “slow growth” numbers that have been about the same for the last seven years. Nevertheless, he is gratified that the local economy continues to grow.

Long, who is the Director of Supply Chain Management Research for GVSU tells us that his April report just released shows the West Michigan economy continues to grow, “even though the pace remains subdued.” His latest data was collected in the last two weeks of April, and calls it “optimistic,” although, he notes, “there remains a scattering of firms that are either flat or declining.

Long’s most watched index is the New Orders Index — an index of business improvement. It remained positive , but backtracked to +7 from the previous month’s reading of +15. By contrast, Long says the Production Index rose to a three-month high of +20, up from +16 in March. Activity in the Purchasing Index rose sharply to +14, up from the previous month’s +3 reading. Long says, “For April, it can be noted that the West Michigan economy approximately paralleled the performance of the national economy as well as the overall Michigan economy.”

Peeking behind the curtain at West Michigan industrial groups, near-record auto sales are “still keeping the local auto parts suppliers operating at full capacity, even though a couple of firms are reporting a slight hesitation.” Meanwhile, the office furniture business remains stable, and the spring season has resulted in “significant improvements for some firms.” As was the case in March, industrial distributors were generally positive, while the capital equipment firms continue to report widely mixed results.

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When Long’s regular monthly survey of West Michigan businesses scans for sentiment in the Short Term and Long Term Business Outlook Index, he finds the business sentiment to be “quite positive.” Regarding local business perception for the near term, or next 3 to 6 months, the Short Term Business Outlook held relatively stable at +34, down modestly from March’s +37. For longer term, 3-to-5 year scans, the professor’s Long Term Business Outlook saw a rise to +49 from the March reading of +44. Long contends that “Given the pessimistic numbers we reported six months ago, the current mood is much more confident.”

In summarizing his full report, Long says “We continue to balance the good news with the bad.” He adds, “Right now, it appears that the U.S. economy is going sideways, and that the slow growth we have seen for the last seven years may get even slower.” Long concludes, “Locally, as long as auto sales and office furniture sales remain strong, West Michigan should continue to outpace the overall U.S. economy, but there is no prospect for faster growth.”

As is his custom, Long shares a number of anecdotal comments from the survey, and here are some of those comments shared verbatim:

  • “New orders are down, but quoting activity is still very strong.”
  • “New orders are a little softer because one of our big customers is slowing activity due to supply interruptions from the earthquake in Japan.”
  • “I think steel shortages are around the corner.”
  • “Business has been soft for the last few months, and it appears the trend will continue. Election year blues?”
  • “Spring break slowdown??? The month of March was disappointing compared to January and February. Our customer base has all reported a softening of business.”
  • “Business remains strong in automotive.”
  • “We are in a momentary dip in our business cycle, but expect things to pick up shortly.”
  • “We just held an open house to display machines, and had over 40 companies visit. Most companies are telling us they are quite busy and planning to add equipment in the next few months.”
  • “We have very steady business. It looks like another good year.”
  • “Right now, the economy is in the sweet spot in my humble opinion. Our first quarter earnings will be better than anticipated. Our second quarter earnings will be more perilous especially in companies that are commodity intensive in raw materials.”
  • “Our business is growing! We are getting lots of new future business!”
  • “We are still a little down on incoming new orders, but things are about to break loose.”
  • “We have lots of automotive quoting action, but controlling growth will be key.”

To see the complete report, click this link:

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