West Michigan industrial economy turned positive in May
The region’s industrial economy turned from flat in April to positive in the May Institute for Supply Management Research Survey. What are the business trends that have local purchasing manager’s feeling optimistic, at least for now?
There’s been talk of a recession for quite some time. Factors driving much of that discussion includes stubborn inflation and the Federal Reserve raising interest rates to tame it. But higher wages and low unemployment with industries seeking workers is a counterweight to the Fed’s target of 2% inflation.
With that as the backdrop, the May Institute for Supply Management Research Current Business Trends Report indicates new orders were up, including production, employment, and lead times.
“Since we instituted this survey many years ago, we've seen our numbers bounce around and well, this month our bounce was to the upside. Our index of new orders came in much stronger than expected. But of course, one month does not make a trend. So, when we add up June at the end of the month, the numbers we get may be a little bit less robust.”
That’s due to the high level of economic uncertainty that exits. Brian G. Long is director of Supply Management Research in the Seidman College of Business at Grand Valley State University
“In reading all the May reports from a lot of different sources we're starting to see some caution flags. One thing is that some of our key commodity prices are starting to drop rather rapidly in price. Now, you would think that was good, but in the industrial market it may be an indication that the industrial market is beginning to soften a little bit more than we expected.”
Locally, Long points to the office furniture industry softening as a result of the pandemic-driven work-from-home model impacting sales.