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Purchasing Managers Index shows new order increases, overall stability in Southeast Michigan economy
February 01, 2013

The Southeast Michigan Purchasing Managers Index (PMI) for January is at 55.3, an increase of 3.5 points from the December PMI of 51.8, indicating faster growth in the Southeast Michigan economy. Generally, index values above the threshold index of 50 indicate growth. Gains in new orders and employment were the significant contributing factors to this month’s increase.

New orders gained more than 10 points, increasing to 58.9 in January after dipping below the threshold index in December at 48.5. The Employment Index increased slightly, from 53.2 to 55.4, and the Production Index increased just less than a point to 55.4 from 54.5 last month. The Commodity Prices Index rose 4.4 points to 58.9 from 54.5 in December.

“We are not only finding relative stability and growth in the overall index, but the employment index appears to be stabilizing as well,” 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. “In the automotive sector, demand for engineers and other professionals is reportedly high, and wages for information technology contingent labor are going up. Many commodity prices are increasing with demand, but decreasing energy prices are providing a boost to the economy.”

The confidence element of the PMI survey indicated that, overall, purchasing managers were optimistic in their expectations of the business environment over the next six months. According to the survey, 10.7 percent of purchasing managers expect more stability, 82.1 percent expect conditions will remain the same and 7.1 percent expect less stability.

“Concerns of most of the respondents centered around legislative issues such as health care reform and gun control,” said Ken Doherty, assistant vice president for procurement and strategic sourcing at Wayne State University and a member of the Southeast Michigan chapter of the Institute for Supply Management. “The possibility of stricter gun laws appears to be benefiting suppliers of gun and rifle accessories, who are reporting increasing orders. There is concern the benefit will be short term, and stricter laws will have long term negative consequences to the industry. Other industries expressed concerns about how new taxes, insurance reforms and decreases in government budgets might affect their businesses.”

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 January is available for download here.