Economics Dept.: PMI Shows Slower Growth

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The Southeast Michigan Purchasing Managers Index dropped from 56.7 in July to 54.2 in August.

Levels above 50 on the index show economic growth, so the change suggests the metro Detroit economy continues to expand, but at a slower rate than the month before.

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, August marks the seventh consecutive month with a PMI value over 50.

August showed modest growth in production, new orders and employment. But purchasing managers reported concern over a continuing economic recovery.

Of the local purchasing managers surveyed, about 82 percent expect that the economic climate will remain the same or improve over the next six months. This is down from 95 percent in July.

“Purchasing managers are proceeding with caution as they watch for more indications that the economic recovery will continue,” said Timothy Butler, associate professor of global supply chain management at WSU’s business school.

Butler says that purchasing managers are reporting increasing vendor delays and a rise in commodity prices.

“It appears that some suppliers are cautious about increasing their capacity for fear of another downturn in business,” Butler said.

The national Purchasing Managers Index for manufacturing activity expanded at a faster rate in August, and has shown expansion for 13 consecutive months. Like the Detroit index, other PMI reports such as Chicago, Eurozone and China reported continued rates of growth.

The complete Purchasing Managers Index report is available online at www.ism-sem.org/cat/Additional+Links-9.html?49.

The Institute for Supply Management – Southeast Michigan serves its members as an affiliate of the Institute for Supply Management by providing superior opportunities for education, networking, and career enhancement as a means of advancing and promoting the leading edge practices and profession of Purchasing and Supply Management.

(c) 2010, WWJ Newsradio 950. All rights reserved.

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