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West Michigan Economy: Return To Modest Growth

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The downtown Grand Rapids skyline. WWJ file photo.

The downtown Grand Rapids skyline. WWJ file photo.

(credit: istock) Technology Report
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GRAND RAPIDS — The West Michigan industrial economy has returned to experiencing modest growth, according to the results of a monthly survey compiled by Brian G. Long, director of Supply Management Research in the Seidman College of Business at Grand Valley State University.

The survey results are based on data collected during the last two weeks of November.
The survey’s index of business improvement, called new orders, rose significantly to +17,
from +6. In a similar move, the production index jumped to +21, up from -1. Activity in
purchasing offices came back to +8, up from -7. The employment index modestly
improved to +13, up from +4.

“This month’s statistics clearly bucked the trend,” said Long. “For the last four years, our
local economy has often been stronger than either the national or international economies, and this month’s report is no exception.”

Long said auto parts suppliers remain positive and firms supporting lines of smaller cars
are continuing to do better than those supporting large SUVs and trucks. “This month’s
statistics were also bolstered by the recent uptick in the office furniture business, which
has resulted in several firms ending the year much better that expected,” said Long. “For
industrial distributors, this month’s performance came in mixed, although the bias was
clearly to the upside.”

Long is also following the debate over the “fiscal cliff,” a dilemma involving $600 billion in spending cuts and tax increases that are set to automatically be triggered if a budget
solution cannot be reached by Jan. 1.

“There is now a movement brewing that some legislators would like to see us go over the
fiscal cliff in order to secure a huge de-facto tax increase and a huge reduction in defense
spending,” he said. “Some legislators feel these goals cannot otherwise be achieved for
many years. They are willing to risk a recession and the loss of jobs for 3.4 million people
in order to accomplish these goals, and suggest new-found revenue be used to provide
extensive benefits for the newly unemployed.”

The Institute for Supply Management survey is a monthly survey of business conditions
that includes 45 purchasing managers in the greater Grand Rapids area and 25 in
Kalamazoo. The respondents are from the region’s major industrial manufacturers,
distributors and industrial service organizations. It is patterned after a nationwide survey
conducted by the Institute for Supply Management. Each month, the respondents are
asked to rate eight factors as “same,” “up” or “down.” An expanded version of this report
and details of the methodology used to compile it are available at
www.gvsu.edu/scblogistics.

For more information, contact Brian Long at (269) 323-2359.

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