Purchasing Managers Index drops slightly to 53.1 in September
Six-month trend indicates a slowing Southeast Michigan economy
The Southeast Michigan Purchasing Managers Index (PMI) dropped slightly from 53.8 in August to 53.1 in September. The lower index value indicates slower growth in Metro Detroit's economy over the past month.
The Southeast Michigan PMI, a composite index of local economic activity, is calculated from a monthly survey of purchasing managers administered by faculty from the School of Business Administration at Wayne State University and the local chapter of the Institute for Supply Management. A score above 50 indicates economic expansion. The higher the score is above 50, the faster the growth rate.
Although the PMI indicated an expanding local economy for 20 consecutive months, it fell each of the past six months. This trend suggests that Southeast Michigan's economy is beginning to experience a slowdown, according to experts.
Nitin Paranjpe, an economist and global supply chain management faculty member in Wayne State's business school, said that the Southeast Michigan economy experienced growth this month in spite of the increasing uncertainty and volatility in the U.S. economy as well as the international economy, primarily Europe.
"We are now starting to see the greater uncertainty reflected in our survey responses," he said. "This month more than one-third of responding purchasing managers said they expect a less stable economy. This shows a marked deterioration in conditions going forward, considering that figure was less than 7 percent in July."
Specific index values that comprise the PMI also declined. While production activity is still expanding at an index value of 53.2, there are signs of a slowdown here as well, with new orders falling below 50. Employment activity perked up to 59.7, but Paranjpe pointed out that employment is a lagging indicator.
"The slowdown in production and new orders may eventually affect employment growth rates," he said.
