Southeast Michigan Purchasing Managers Index shows growth resuming

The Southeast Michigan Purchasing Managers Index (PMI) for September is at 50.6, up nearly five points from the August PMI of 45.7 and indicating a resumption of growth in the Southeast Michigan economy after three declining months. A PMI value of 50 or more generally suggests an expanding economy. Increases in production, new orders and vendor deliveries were the contributing factors to this month’s increase.

Production, while still hovering below 50 at 47.1, increased more than five points from 41.9 last month. New orders grew significantly, increasing nearly 10 points from 41.9 to 51.5. Vendor deliveries increased from the threshold index of 50 last month to 55.9 in September.

The Employment Index dropped slightly from 53.2 to the threshold index of 50.

“Employment, which had been growing, has basically leveled off,” said Nitin Paranjpe, a supply chain faculty member at Wayne State University’s School of Business Administration who analyzed the purchasing report from the Southeast Michigan chapter of the Institute of Supply Management.

“Since employment is a lagging indicator, the growth in new orders and production activity should lead to a resumption of growth in employment in the future,” he said.

The Commodity Prices Index tempered slightly from 61.3 to 60.3, with purchasing managers noting copper, zinc, aluminum, steel, crude oil, resins, and petroleum based products up in price. Stainless steel, propylene-based resins and rare earth were down in price.

“Commodity price index slowed somewhat, though prices still remain at high levels similar to the trend seen in 2011, when they stayed high for 11 straight months,” said Ken Doherty, assistant vice president for procurement and strategic sourcing at Wayne State University and a member of the Institute for Supply Management.

Surveyed about their expectations of the business environment in six months, 47.1 percent of purchasing managers reported that they presume the economy will remain the same, 23.5 percent expect more stability, and 29.4 expect less stability.

The Southeast Michigan Purchasing Managers Index (PMI) is a research partnership between Wayne State University’s School of Business Administration and the Institute for Supply Management – Southeast Michigan. The complete report for September is available for download here.

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