Southeast Michigan PMI Shows Economic Slowdown
DETROIT — The Southeast Michigan Purchasing Managers Index for July registered 54.6, down from the June PMI of 60.3.
The survey shows growth in the Southeast Michigan business economy, though at a slower rate from the past two months. A PMI value of 50 or more generally denotes an expanding economy, and the further above 50, the faster the growth. The index has been above 50 for 29 of the past 30 months. The specific components that drove the weakening PMI value include production, which dropped to 50 from the June value of 60.9, and new orders, which declined to 50 from the June index value of 54.2. Finished goods inventory increased to 58 above the threshold index value of 50.
The commodity prices index increased slightly from 43.5 to 48, with purchasing managers noting that petroleum, specialty steel and abrasive products were up in price. Resins, plastics, copper, steel, rare earth metals, gas and oil were reported to be down in price.
“The only individual score consistent with signs of a rebounding economy is the upward trend for employment,” 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 employment index is down from June’s index of 76.1, but remained very strong at 66.”
“Overall, the PMI seems to be trending down to slower growth, which does not portend too well for future growth in Southeastern Michigan,” said Nitin Paranjpe, an economist and supply chain management faculty member at Wayne State’s business school, who analyzed the survey data. “For some time our data were showing that Michigan’s economy was doing better than the national economy, but now we are beginning to see this downward trend. The general tone of comments from our survey respondents provides some preliminary evidence of a slowdown, with a focus on Europe, the upcoming presidential election, and health care.”
While 72 percent of respondents reported that they believe the economy will remain the same or become more stable over the next six months, this number is down from the June number of 77.3 percent.
The Southeast Michigan Purchasing Managers Index (PMI) is a research partnership between Wayne State University’s School of Business Administration and the Institute for Supply Management Southeast Michigan. The complete report for July is available for download at www.ism-sem.org/uploaded_pics/pdf-20120731095416.pdf.