Southeast Michigan economy improved in October, according to Wayne State and Institute for Supply Management Purchasing Managers Index
The Southeast Michigan Purchasing Managers Index (PMI), a composite index of economic activity, rebounded to 59.7 in October from September’s index of 53.1. An index above 50 indicates an expanding economy. The higher the index grows above 50, the faster the economy appears to be growing.
“The PMI increase in October marks 21 straight months of growth, which indicates an expanding economy,” said Timothy Butler, associate professor of global supply chain management at Wayne State’s business school.
“During the last three months, the index had declined to near the threshold of 50, suggesting that the economy may be cooling,” he said. “The October index suggests a possible, but far from conclusive, return to a stronger business economy.”
Ken Doherty, a board member with the Southeast Michigan affiliate of the Institute for Supply Management and interim director of purchasing at Wayne State University said that for the second month in a row “one-third of the responding purchasing managers reported that they expect the economy over the next six months will turn less stable.” He said this represents a considerably higher proportion of pessimistic respondents compared to the summer months, where “the percentage of those anticipating a less stable economy was below 10 percent.” Purchasing managers’ concerns ranged from an anticipated slowdown during the coming holiday season to the financial crisis in Europe.
Specific indexes in the PMI report revealed glimpses of optimism. The Production Index and Employment Index improved in October over September, to 58.3 and 68.8 respectively. The New Order Index improved from 48.4 to 56.3, indicating that the amount of new orders had declined in September, but had increased again in October. Raw Material and Finished Goods Inventory indexes also resumed growth in October after falling below 50 for a month. The Commodity Prices Index rose noticeably to 66.7.
