If spring is the growing season, it’s working well for the West Michigan industrial economy as well, as Professor Brian Long points out in his latest survey of Current Business Trends for the month of April. Dr. Long is the Director of Supply Chain Management Research at Grand Valley State University and in his newest report he tells us that the West Michigan industrial economy “is surprisingly strong.”
Long’s report says that the New Orders Index, which is designed to reflect business improvement or erosion, bounced to +35, “up nicely” from +21. However, the Production Index, while remaining very strong, actually eased to a reading of +29 from +31.
Long says activity in the Purchasing Index came in virtually unchanged at +26, while stronger April sales reports pulled the Finished Goods Inventories Index down to -4. Long adds that the fear of more price increases probably helped drive the Raw Materials Inventories Index up to +16 from +9.
“Overall,” says Dr. Long, “the second quarter of 2017 has begun on a strong note.”
Moving on to look at individual industries in the marketplace, Professor Long says most auto parts suppliers “are still positive, although several respondents have voiced concerns about softening auto sales.” Meanwhile, the office furniture business is still experiencing a spring rally, and smaller firms are outpacing their larger counterparts.
The capital equipment market has “turned mixed” according to Long’s April survey data, “but the bias is to the up side.” He adds, “Just like many months in the past, the performance for the industrial distributors continues to be mixed.”
Professor Long notes that there are now “some apparent signs that the Trump rally may be running out of steam.” He says that for April, the West Michigan Index of the Short Term Business Outlook, which asks about local firms’ perception for the next three to six months remained positive, “but backtracked to +32 from +37.” In the Long Term Business Outlook, which studies perceptions for the next three to five years, survey respondents remained positive as well, but edged down to a near-record low of +35 from +47.
For West Michigan employment, Long says “Spring has arrived,” with that index coming in at +25, “a two year high,” which Long says means, “Many firms are still adding staff, even though there are signs that both the automotive and office furniture industries are topping out.”
Summarizing his findings, Professor Long says, “The post-election rally may have run its course, but positive news from Washington can keep the ball rolling.” He adds, “Our local statistics remain strong, and at least for now, there is no sign that we are sliding toward a recession.” He does note, however, that “Caution flags are out. For West Michigan, we need to keep a close eye on auto sales, because slower sales will eventually spill over into reduced production schedules for an industry that has been booming since the infamous ‘Cash for Clunkers’ incentive program of 2009.”
As is his standard practice, Professor Long includes an array of anecdotal comments giving us a verbatim look at the thoughts generated by his survey. Always anonymous, they give you a bit more insight into what West Michigan manufacturers are thinking. Here are some of those, selected at random from the report:
- “We have been very busy since the first of the year but our schedule is looking a little slower for May.”
- “Business is very good still, but our future orders have slowed down a bit.”
- “We are getting busier. The second and third quarters are out busiest time of year.”
- “Auto inventories are climbing. Plants are extending summer shutdowns. Incentives are brewing. Will we see a downturn in the future of the automotive build?”
- “Business is steady.”
- “We are still very busy, and that is a good problem.”
- “Things have been picking up slightly. New orders are starting to break loose.”
- “Automotive remains strong.”
- “We’re performing capacity studies.”
- “Things are stable.”
- “Orange barrels are out, and we are very busy repairing and repaving the roadways. It will be a very busy season!”
- “We’ve had a soft first quarter, but we see a promising second quarter ahead.”
- “We are still doing quite well, although not quite as robust as last year.”
- “The first quarter of 2017 has not been good to us. Sales are down about 5-percent.”
- “Sales remain flat. We have some hopes that projects will start to shake loose at the end of the calendar year. Until then, we will focus on inventory and cost reduction.”
- “March was less than stellar, but April is making up for it.”
