Purchasing Managers Index shows favorable economic conditions heading into new year

The Southeast Michigan Purchasing Managers Index (PMI) bounced back in December 2016, gaining 3.9 points to reach a value of 61.9. Despite November’s drop, the three-month average is a strong 62.0. A PMI above 50 is considered an indication of an expanding economy.

“We’ve experienced a see-sawing trend over the past six months between the mid-50s and 60s. While there have been ups and downs, these are all solid PMI values,” said Nitin Paranjpe, a finance faculty member in Wayne State University’s Mike Ilitch School of Business, who interpreted this month’s results. “We’re looking at a healthy economy here in Southeast Michigan as we head into 2017 and the political transition in Washington D.C.”

Components contributing to the PMI’s December climb include the Production Index rising sharply to 62.5, the New Order Index rising to 70.8, and the Employment Index holding steady at 62.5, which reflects very strong growth in the labor market.

However, a growing number of survey respondents — about 27 percent — predict that the economy will become less stable over the next six months.

“In spite of the strength of the economy, survey respondents noted that their expectations of the business environment six months into the future were not that robust,” said Kenneth Doherty, assistant vice president of procurement and strategic sourcing at WSU and an Institute for Supply Management board member. “With the presidential election behind us, respondents’ concerns focused on rising interest rates and inflation, as well as changes to the Affordable Care Act, all of which may result from the new administration.”

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_December-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.