DETROIT (WWJ) – The Southeast Michigan Purchasing Managers Index for March rebounded to 55, up from 47.3 in February.
Officials with the Wayne State University School of Business Administration, which compiles the results, said early indications suggest the economy is simply emerging from the effects of particularly harsh winter weather.
“Three key indices contributed to the sharp upswing in this month’s PMI,” said Nitin Paranjpe, a supply chain faculty member at the business school. “Production, new orders and employment indices all increased strongly, signaling an expanding economy. Also, notably, the finished goods index dropped from 51.7 to 40.9, which also supports a growing economy” — because it means less finished goods are sitting around in inventory unsold.
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.
The dramatic swings within the March report are reflected in the respondents’ comments as well, ranging from “A couple of large road building projects will spike the local economy,” to “Russia/Ukraine/Crimea and Venezuela will have far-reaching effects,” and “We have so many issues it’s hard to figure out where this economy is headed.”
Overall, just more than 80 percent of respondents see the economy as stable or more stable, with fewer than 20 percent expecting less stability over the next six months.
March prices for fuel costs, snow removal costs, hardwood lumber, steel, copper, plastic based parts, aluminum, and resins were up in price. Maintenance, repair, and operations items were down in price.
The Southeast Michigan Purchasing Managers Index is a research partnership of the WSU School of Business Administration and the Institute for Supply Management – Southeast Michigan.
The full PMI report for March can be found at http://www.ism-sem.org/resources/files/PMI-March-2014.pdf.