Purchasing Managers Index Finds Local Economy Shrinking
DETROIT (WWJ) — The Detroit-area economy slipped into reverse in February, according to Southeast Michigan Purchasing Managers Index.
Officials with Wayne State University’s School of Business Administration, which compiles and interprets the results, say the index dropped to 47.3 in February, down from 52.3 in January.
The southeast Michigan PMI is a diffusion index with a baseline of 50. A group of corporate purchasing managers is asked whether a variety of economic indicators is the same, lower or higher than a month earlier. The farther the index is above 50, the more managers answered that the indicators were higher. Figures below 50 indicate that more managers answered that the indicators were down from a month earlier.
“Though the southeastern Michigan economy has slowed a bit, there’s no reason to believe that this is a long-term slowdown, at most it could be described as a temporary cooling of the economy,” said Timothy Butler, associate professor of supply chain management at Wayne State. “The southeast Michigan economy has been consistently strong since coming out of the recession. We should not be too concerned about two or three months of poorer results during this time of year.”
PMI respondents seem to agree with Butler, as 80 percent believe the economy will likely maintain relative growth or improve over the next six months, while just 20 percent believe the economy will become less stable over the same period of time. Some expressed expectations that the European economy will continue rebounding, benefitting our economy as well.
February prices for plastic, gasoline, propane, diesel fuel, petro chemicals, acrylic, polycarbonate, brass, rubber, plate steel and aluminum are all up. Items down in price include nylon and resin.
The southeast Michigan PMI is a research partnership between Wayne State University’s School of Business Administration and the Institute for Supply Management – Southeast Michigan.
The full report can be found at http://www.ism-sem.org/resources/files/PMI-%20February%202014.pdf.
More at http://www.ism-sem.org or http://www.business.wayne.edu.