SE Michigan economy continues improvement, according to latest purchasing managers survey
New orders, production up significantly
April 8, 2010
The Southeast Michigan Purchasing Managers Index (PMI) continued its upward climb in March to 64.1, up from 57.6 in February. The PMI 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 the School of Business Administration at Wayne State University. Readings greater than 50 indicate expanding economic activity. [audio] [video]
This latest increase in the index indicates that the economy is improving at a faster rate, according to Nitin Paranjpe, an economist and faculty member in the WSU business school. He analyzed the March survey results, finding that most of the key factors affecting the index increased, including production, new orders and inventories of raw materials and finished goods. However, the employment index dropped slightly after a sharp increase between January and February.
"Manufacturing activity seems to be leading the U.S. economy out of its worst recession since the Great Depression," Paranjpe said. "The Southeast Michigan PMI is on the rise, and the national PMI increased from 56.5 in February to 59.6 in March. All of this economic activity will gradually lead to employment levels stabilizing or new jobs being created, which is very important for the overall economy." [audio] [video]
He pointed out that economies around the world also are improving. "Manufacturing activities in China, the United Kingdom and the Euro-Zone are helping to power the global recovery, with all of their PMIs coming in over 55," he said.
In Southeast Michigan, the key factors pointing toward economic improvement in March were increases in new orders, production and inventories. "The increase in new orders is a good sign for the economy in Southeast Michigan," Paranjpe observed. "It's likely that the rise in new orders and an expected growth in orders in the near future prompted the surge in production and inventories. Now, we wait for this trend to continue and translate into new jobs." [audio] [video]
Employment in Southeast Michigan continues to lag behind the rest of the country. Nationally, the U.S. economy gained more jobs in March 2010 than in any month in the past three years. According to the U.S. Department of Labor, the economy gained 162,000 jobs last month. But Paranjpe points out that many were in temporary help services, including the federal government's hiring of temporary workers for Census 2010. According to the most recent unemployment data, the national unemployment rate stayed at 9.7 percent, while Michigan's unemployment rate remained the highest for all states at 14.1 percent. [audio] [video], [audio] [video]
Overall, purchasing managers remain optimistic. Nearly 90 percent of survey respondents expect the business environment to remain the same or become more stable over the next six months. Purchasing managers' immediate concerns include employment, health care reform and the slow speed of the stabilization. [audio] [video]
The complete Purchasing Managers Index report for March is available online at
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.
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