S.E. Michigan Purchasing Managers Index remains steady despite some looming economic concerns
The Southeast Michigan Purchasing Managers Index (PMI) rose one point from August to September, from 56.6 to 57.6, despite a significant drop in commodity prices that could potentially indicate a period of economic deflation.
According to Nitin Paranjpe, global supply chain management faculty member at Wayne State University’s School of Business who interpreted this month’s results, the decreases in the commodity price index appear to be driven by recent drops in gasoline and petroleum pricing.
“However, if decreases in commodity prices continue or expand and begin to cause deflation, it could make the job of the Federal Reserve more difficult,” Paranjpe said, adding that the Fed typically shoots for a target inflation rate of 2 percent.
The PMI’s 3-month average currently stands at 57.3. While a PMI value above 50 generally suggests economic growth, this is the first time the 3-month average has dipped below 60 since March.
Despite some general concerns about the economy and the potential of rising interest rates, survey participants remain bullish about the Southeast Michigan business environment moving forward. More than 88 percent believe the economy will be either more stable or about the same over the next six months.
According to Kenneth Doherty, assistant vice president of procurement and strategic sourcing at WSU and an Institute for Supply Management board member, indices in production and employment and new orders all remain high heading into the fall.
“Several respondents expressed optimism that their businesses will see growth in the fourth quarter,” Doherty said.
The Southeast Michigan Purchasing Managers Index (PMI) is a research partnership between Wayne State University’s School of Business and the Institute for Supply Management - Southeast Michigan.
The full report can be found at http://www.ism-sem.org/resources/files/Report-on-Business_September-2015.pdf.
