Looming presidential election spurs increasing predictions for unstable economy

The Southeast Michigan Purchasing Managers Index (PMI) ramped up seven points to 67.2 for October 2016, boosting the three-month average nearly four points to 64.5. However, in anticipation of Tuesday’s presidential election, a dramatically increasing number of survey respondents aren’t confident the upward trend will hold. This month, 31.3 percent predicted a less stable economy over the next six months; in comparison, 0 percent held that opinion in July.

“The index has maintained a value greater than 50 since June of 2014, an impressive and remarkable streak of growth and economic expansion that seems to parallel the underlying resurgence of the domestic automobile sector in Southeast Michigan with record profits being reported by automakers. Paradoxically, in spite of the strength in the economy, survey respondents noted that their expectations of the business environment six months into the future were not very robust,” said Nitin Paranjpe, a finance faculty member in Wayne State University’s Mike Ilitch School of Business, who interpreted this month’s results.

The Employment Index powered ahead from 62.5 to 75.0, indicating that the healthy summer employment trend has continued into autumn in Southeast Michigan. In addition, the Production Index rose sharply to 73.5, a 14-point gain over last month. The New Order Index increased as well, hitting 70.6.

“The numbers are the highest they’ve been all year, but nonetheless many production managers are feeling uneasy due to the country’s political divisiveness. One way or another, the election is going to have an impact on the economy,” said Kenneth Doherty, assistant vice president of procurement and strategic sourcing at WSU and an Institute for Supply Management board member.

The Southeast Michigan Purchasing Managers Index (PMI) is a research partnership between Wayne State University’s Mike Ilitch School of Business and the Institute for Supply Management – Southeast Michigan.

The full report can be found at http://www.ism-sem.org/resources/files/Report-on-Business_October-2016.pdf.

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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. Visit their website at http://www.ism-sem.org.