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Purchasing Managers Index suggests SE Michigan economy is experiencing steady, healthy expansion

May 6, 2010
The local economy continued to improve during the month of April according to the latest Southeast Michigan Purchasing Managers Index released by Wayne State University's business school and the local chapter of the Institute for Supply Management. The index dropped 6.8 points in April to 57.3, meaning the expansion rate was slower than in March. However, an index above 50 implies that the economy continues to grow.

"The Southeast Michigan economy is growing slowly, which is a healthy growth," said Tim Butler, associate professor of global supply chain management at WSU's School of Business Administration. "We're following the national growth trend." [audio] [video]

According to Butler's analysis, a key reason the local index is down from March is a reported reduction in finished goods inventories. [audio] [video]

"The inventory reduction is likely due to an increase in consumer spending," said Butler. "This is good news for the economy and softens the negative aspect of the reduced PMI score."

Strong auto sales in the first quarter and increased activity in the national economy also suggests improving consumer confidence. Furthermore, purchasing managers reported strong production and new orders, signifying local economic improvement.

Purchasing managers also reported anecdotal evidence of economic recovery. One survey respondent commented that manufacturers and vendors are not keeping up with new demand, and another reported late ship dates due to shortages.

Employment growth stalled during April. The employment index for April is 50, indicating no change in hiring activity from March. [audio] [video]

Looking ahead, less than seven percent of local purchasing managers think the economy will decline over the next six months. This figure improved from over 10 percent last month.

More than 33 percent expect the economy to become more stable and 60 percent expect the economy to remain about the same.

The Purchasing Managers Index is a composite index of economic activity compiled from a monthly survey of local purchasing managers conducted by the Institute for Supply Management - Southeast Michigan and analyzed by faculty from the School of Business Administration at Wayne State University. The index tracks changes in production, new orders, raw material and finished goods inventories, employment, vendor deliveries and commodity prices.
The complete Purchasing Managers Index report for April is available online at http://www.ism-sem.org/cat/Additional+Links-9.html?49.

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The Institute for Supply Management - Southeast Michigan serves its members as an affiliate of the Institute for Supply Management by providing superior opportunities for education, networking, and career enhancement as a means of advancing and promoting the leading edge practices and profession of Purchasing and Supply Management.

The School of Business Administration at Wayne State University provides quality business
education through degree programs accredited by AACSB International. Wayne State University is a premier urban research university offering more than 350 academic programs through 13 schools and colleges to nearly 32,000 students.

  • Contact: Nitin Paranjpe
  • Voice: (248) 292-0208
  • Email: ai8668@wayne.edu
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  • Contact: Timothy Butler
  • Voice: (313) 577-9810
  • Email: timothy.butler@wayne.edu
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