Key metrics on West Michigan industrial activity trending downward, survey finds
Posted By: MiBiz on November 7, 2022. For more information, please click here to read the source article.
Key metrics in a monthly report on West Michigan’s industrial economy trended downward last month into negative territory, reflecting a slowing economy.
Indexes for new orders, purchases and employment each fell into negative territory for October, according to results from economist Brian Long’s monthly survey with industrial purchasing managers in Grand Rapids and Kalamazoo. An index for production improved five points to register a positive-5 for October.
The results come “as no surprise,” said Long, director of supply chain management research at Grand Valley State University’s Seidman College of Business.
“Primarily because of rising interest rates, the West Michigan economy will continue to slowly soften,” Long wrote in his report for October that noted there “is no sign that inflation will be tamed anytime soon and additional interest rate hikes are ahead.”
“Any industry tied to borrowing, especially residential construction, is already feeling the pinch. In addition, rising interest rates are causing the market for existing homes to falter,” Long wrote.
Among the key indexes, sales declined from zero in September to a negative-12 in October, and the purchasing index went from a negative-7 to a negative-12 during that time. The index for employment declined from a positive-4 to a negative-2.
The three- to six-month short-term business outlook dipped two points to a negative-14, and the three- to five-year outlook declined by 12 points but remained in positive territory at a 5 for October.
“Although some survey participants are still talking about a slowdown, others appear to be bracing for a recession. My best guess at the moment is still a shallow recession. All recessions are uneven, and this one will impact interest-rate sensitive industries such as housing. In addition, home values, which had been skyrocketing in many markets, will backtrack,” Long wrote in an email with his monthly report.
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