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Southeast Michigan Purchasing Managers Index grows 12 straight months, indicating end of “Great Recession”

February 1, 2011
The Southeast Michigan Purchasing Managers Index (PMI) dropped to 55.5 from 56.3, indicating that Metro Detroit's economy grew at a slightly slower rate in January. This latest PMI value reveals a growing economy each of the last 12 months, indicating that the "Great Recession" of the past three years is finally over.

PMIs are leading indicators, often forecasting what is to come before the economy changes. A score above 50 indicates economic expansion. The higher the score is above 50, the faster the growth rate.

The Southeast Michigan PMI evaluates local economic activity via a monthly survey of purchasing managers. Administered jointly by faculty from the School of Business Administration at Wayne State University and the local chapter of the Institute for Supply Management, the index takes into account factors such as production, new orders, inventories of raw materials and finished goods, employment, vendor deliveries and commodity prices.

Production, new orders and employment in Southeast Michigan all grew in January, but at a slightly slower rate than in December. Finished goods inventories and vendor deliveries increased at a faster rate. Raw materials inventories decreased.

Nitin Paranjpe, an economist and supply chain faculty member at Wayne State's business school who analyzed the survey data, said that employment saw marked improvement over the last year.

"Michigan's unemployment rate was 14.5 percent in December 2009 and dropped to 11.7 percent by December 2010," said Paranjpe. "This is a statistically significant improvement according to the Bureau of Labor Statistics, likely due to the steady growth in overall economic activity over the past 12 months."

In January, purchasing managers' comments about the stability of Michigan's economy were mixed.

Some survey respondents reported very positive earnings in the last quarter of 2010. Comments about the automotive sector were positive, pointing to increased vehicle sales.

Lingering credit concerns bothered some purchasing managers, and many raised concerns about price pressures, particularly increases in raw materials prices including oil, steel, copper and aluminum. The latter is not a surprise, as the commodity prices index came in at a high 75 in January, with no commodity prices cited as being down in price.

Overall, purchasing managers remained optimistic about the Southeast Michigan economy over the next six months, with 87.5 percent of respondents expecting the economy to remain the same or become more stable.

The complete Southeast Michigan Purchasing Managers Index report for January is available online at http://www.ism-sem.org/uploaded_pics/pdf-20110127114921.pdf.

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 400 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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