Southeast Michigan Purchasing Managers Index drops sharply in June, adjustment likely due to drop in New Orders Index

DETROIT— The Southeast Michigan Purchasing Managers Index dropped sharply in June, to 49.2, after having reached a six-month high of 61.2 in May. The 12 point drop is reportedly due to a decrease in the New Orders Index (from 68.0 to 47.6), Finished Goods Inventory Index (from 44.0 to 33.3) and the Employment Index (from 66.7 to 57.1).

“This is the first time since August 2012 that the Southeast Michigan PMI has fallen below 50. It’s likely the drop is only temporary and may simply be reflective of a “leveling out” of the prior months’ activity,” said Timothy Butler, associate professor of supply chain management at Wayne State’s business school. “PMI values above 50 generally indicate an expanding economy, and the three month average remains favorable at 55.2.”

Butler also pointed out the Commodity Prices Index increased slightly from 52.0 to 59.5, resulting in a three month average that is essentially unchanged at 53.8. The Production Index reduced slightly, from 50.0 to 47.6. Commodity prices increasing were zinc, plastics, resins, and fuel. The only commodity declining in price was aluminum. More than 90 percent of the respondents anticipate the stability of the economy will remain about the same or improve over the next six months.

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

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