Southeast Michigan Purchasing Managers Index shows sharp increase signaling growth in economy

DETROIT— The Southeast Michigan economy experienced accelerated growth according to the May Southeast Michigan Purchasing Managers Index (PMI). The May index value is 61.2 representing a sharp rise from the April index of 55.3. Southeast Michigan PMI values have remained above 50 for 37 of the past 39 months. A PMI value above 50 generally suggests economic growth.

“Sequestration does not seem to have impacted the Southeast Michigan economy to any measurable extent”, said Nitin Paranjpe, a supply chain faculty member at Wayne State University’s School of Business Administration who interpreted the results of the purchasing managers survey. “Production, new orders, and employment all increased sharply to climb into the 60’s. This should lead to a steady decline in the unemployment rate over the summer months. In fact, automobile manufacturers are curtailing their traditional summer slowdown and shutdowns and are instead ramping up production activity.”

Paranjpe noted the Employment Index also moved from the 50’s to a very favorable May index of 66.7, pushing the three month average to 62.2. Meanwhile, the Commodity Price remains low, having risen only two points from 50 to 52.0. The three month average was down from 58.5 to 53.6, giving the impression that prices have and will continue to be stable, thanks mainly to slowdowns in economic activity in the rest of the world economy.

“The index numbers demonstrate relative stability between February and May, with a hint of economic improvement as the numbers continue to go up. However, the drop in commodity price index, which often signals a buildup in inventory, leaves us something to watch, and may be a factor in the coming months,” said Ken Doherty, a member of the Institute for Supply Management and assistant vice president for procurement and strategic sourcing at Wayne State University.

Items increasing in price in Southeast Michigan included aluminum, rubber, crude, fine chemicals and electronic goods. Copper and propylene based resins were reported down in price.

The latest report shows that 84 percent of purchasing managers expect that the economy will remain about the same over the next six months, while the remaining respondents are evenly split with eight percent believing the economy will be less stable and eight percent saying the economy will be more stable during the same period of time.

The Southeast Michigan Purchasing Managers Index is a research partnership between Wayne State University’s School of Business Administration and the Institute for Supply Management – Southeast Michigan. The complete report for May is available for download here.