The Southeast Michigan Purchasing Managers Index expanded to 66.1 in June, indicating that the local economy experienced a significantly high rate of expansion. Comerica Bank’s Michigan Business Activity Index is also indicating expansion, although at a slower rate than the first quarter.

June marks the fifth consecutive month with PMI values over 50. An index above 50 indicates an expanding economy. The higher the value is above 50, the greater the rate of expansion.

According to the survey results compiled by the Wayne State University School of Business Administration and the Southeast Michigan chapter of the Institute for Supply Management, the growth in June was due to a strong increase in new orders and marked expansion in production and employment.

The production index exceeded 60 for four successive months, with an index of 69.2 in June. The new orders index for June was 75, with more than 60 percent of respondents reporting increases in new orders.

The employment index was at a solid 61.5. While this suggests that employment conditions in Southeast Michigan are improving at a faster rate, Michigan continues to experience high unemployment numbers.

“Statewide, employment is improving only modestly,” said Timothy Butler, associate professor of global supply chain management at WSU’s business school. “Michigan unemployment remains over 13 percent, and recent labor department reports show national employment growth slowing, so we continue to watch the trends.”

Nationally, the manufacturing PMI expanded for the 11th consecutive month. The national PMI index rating the overall economy grew for 14 straight months, but the rate of growth has slowed. PMI indexes in China and the Europe also slowed, causing some concern among purchasing managers that worldwide economic expansion may be cooling.

Of the local purchasing managers surveyed, more than 88 percent expect that the economic climate will remain the same or improve over the next six months.

“Overall local purchasing managers are cautiously optimistic about the economic conditions as they see more activity in their organizations,” Butler said.

The complete Purchasing Managers Index reports are available online at

Also last week, Comerica Bank’s Michigan Economic Activity Index rose one point in May, to a level of 83. May’s reading is up 12 points from the same period a year ago, marking the fourth consecutive double-digit increase in the Index, on a 12-month basis. Year-to-date, the Index is up nine points, or 12 percent, from the average for all of 2009. The April Index was unrevised from a level of 82.

“Our Index has stalled somewhat in the second quarter, after climbing impressively in the first quarter,” said Dana Johnson, chief economist at Comerica Bank. “A notable increase in steel production in May helped offset declines in gas consumption, motor vehicle sales, and building permits. The recovery in Michigan, thus far driven largely by increased consumer spending and production, has struggled in the second quarter of the year, with consistent gains in the housing and employment sectors unsustained as of yet. Over the course of the year, however, broad-based gains in the national economy should result in sustained moderate job growth in Michigan, resulting in an increasingly widespread recovery.”

The Michigan Economic Activity Index equally weights nine seasonally adjusted coincident indicators of real economic activity. These indicators reflect activity in the construction, manufacturing and service sectors as well as job growth and consumer outlays. A complete Index history is available upon request.

To receive this Index directly to your email inbox, go to to subscribe.

(c) 2010, WWJ Newsradio 950. All Rights Reserved.


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