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Southeast Michigan Purchasing Managers Index Jumps In February

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The Southeast Michigan Purchasing Managers Index jumped eight points in February to a four-month high of 63.5.

Index values above 50 generally represent an expanding economy.

The Index expanded for the 13th straight month, with a number of components that comprise the index increasing sharply.

These latest results of a monthly survey of purchasing managers compiled by the Wayne State University School of Business Administration and the Southeast Michigan chapter of the Institute for Supply Management indicate that the local economy is experiencing a steady, healthy growth.

The production index increased by over 10 points in February to 68.2, indicating that more producers are expanding their output at an increasing rate.

“Like the composite PMI, the production index also has expanded for 13 consecutive months,” said Timothy Butler, associate professor of global supply chain management at Wayne State’s business school, who analyzed the survey results. “This is a strong positive signal for the Southeast Michigan economy.”

Survey results also show that more businesses are making new orders. The new orders index increased from 56.3 in January to 65.2 in February.

Employment continues to show expansion, with a February index of 60.6 compared to the January index of 54.7.

Raw material inventories were up sharply and finished goods inventories were up modestly in February compared to January.

Butler said that an overwhelming number of purchasing agents see prices on the rise, signaling a potentially inflationary environment.

Over 50 percent of the respondents reported that more commodities were up in price, with the commodity price index being a markedly high value of 77.3. Purchasing managers reported that petroleum products, metals, cotton, and resin were up in price. The respondents did not report any commodities that were lower in price.

Overall, purchasing managers are optimistic about the near future. Almost half of the respondents indicated that they believed that the economy would become more stable in the next six months and less than 10 percent believed that the economy would become less stable.

Cautionary comments made by purchasing managers indicated that their suppliers are struggling to meet demand and some report delayed shipments. Respondents also indicated concern about price increases and lack of capacity.

The complete Southeast Michigan Purchasing Managers Index report for February is available online at http://www.ism-sem.org/uploaded_pics/pdf-20110227062956.pdf.

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.

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