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Purchasing Managers Find Growing Economy In SE Michigan

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DETROIT — The Southeast Michigan Purchasing Managers Index, a research partnership between Wayne State University’s School of Business Administration and the Institute for Supply Management – Southeast Michigan, indicates that metro Detroit’s business economy continued to improve in February.

The PMI came in at a strong 65.1, slightly lower than the 65.9 reported in January. Generally, PMI index values above 50 suggest an expanding economy — the further above 50, the stronger the growth.

“The Southeast Michigan PMI has been above 50 for 24 of the past 25 months, suggesting an improving business climate in Metro Detroit for two years now,” said Timothy Butler, associate professor of supply chain management at Wayne State’s business school.

Butler said the specific economic components that drove the strong PMI value in February include Production, in which the index value increased to 70.7 from the January index of 63.3; New Orders, still strong at 65.5 though it fell from the January Index of 71.7; and Finished Goods Inventory, which fell to 53.4 from a January Index value of 60.0. Falling inventory suggests increased business activity within the region, with companies actually selling what they’re making, not just stockpiling it.

Employment continued to improve with a very strong index value of 70.7, an increase from 66.7 in January, indicating that purchasing managers are observing more hiring in their companies during the past month.

Commodity prices continue to increase, according to the Purchasing Managers survey. The February Commodity Prices Index sharply increased to 65.5 from 55.0, with petroleum-based products, resins and aluminum up in price and natural gas down in price.

More than 86 percent of respondents reported that they believe the economy will remain steady or become more stable over the next six months.

“Purchasing managers expressed concerns about vendor lead time, commenting that they have experienced longer lead times due to increased demand and that they are planning for longer lead times during the summer months,” said Ken Doherty, a member of the Institute for Supply Management and assistant vice president for procurement and strategic sourcing at Wayne State University. “The expanding economy means purchasing managers are concerned not only about longer vendor delivery times in the coming months, but also increasing prices.”

The complete Southeast Michigan Purchasing Managers Index report for February is available for download at http://www.ism-sem.org/uploaded_pics/pdf-20120229185023.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. Visit their website at http://www.ism-sem.org.

Wayne State University is a premier urban research university offering more than 400 academic programs through 13 schools and colleges to nearly 32,000 students. The School of Business Administration offers AACSB accredited programs at the bachelor, master and doctoral levels and is recognized for academic excellence by The Princeton Review and U.S. News and World Report. Learn more at http://www.business.wayne.edu.

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