Southeast Michigan Purchasing Managers Index shows gains in new orders, employment and production in March; future confidence waning slightly
The Southeast Michigan Purchasing Managers Index (PMI) grew by four points in March, from 51.7 to 55.7, signifying a faster growing economy. The three month average also increased from 52.9 to 54.2. Generally, PMI values above the threshold index of 50 indicate growth. Three month averages between 50 and 55 for eight consecutive reports further demonstrates continuing economic growth in metropolitan Detroit. Gains in new orders and employment were the significant contributing factors to this month’s increase.
New orders gained 7.3 points, increasing to 55.9 in March after dipping below the threshold index in February to 48.6. The Employment Index increased 6.4 points, from 54.2 to 60.6, and the Production Index increased 1.5 points to 52.9 from 51.4 last month.
The Commodity Prices Index dropped 7.9 points to 58.8 from 66.7 in February. Petroleum, gas, diesel, oil-based products, aluminum and active fine chemicals were noted as up in price.
“Commodity prices, mainly of petroleum and petroleum-based products, are quite volatile,” said Nitin Paranjpe, an economist and supply chain faculty member at Wayne State University’s School of Business Administration who interpreted the results of the purchasing managers survey. “The moderation in their rate of growth is welcome, though easily reversible.”
The confidence element of the PMI survey indicated that purchasing managers’ expectations of future business activity over the next six months were generally supportive of stability, but indicated some increase in uncertainty over the past two months. According to the survey, 14.7 percent of purchasing managers expect more stability, 64.7 percent expect conditions will remain the same and 20.6 percent expect less stability.
“Comments from participants indicated the influence of Europe, sequestration, budget impasse and health care reform, to name a few, and hoped that some of these influences would be temporary,” said Ken Doherty, assistant vice president for procurement and strategic sourcing at Wayne State University and a member of the Southeast Michigan chapter of the Institute for Supply Management.
The Southeast Michigan Purchasing Managers Index 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 March is available for download here.