June 7, 2010

Local economy growing at a faster rate, employment improving

SE Michigan Purchasing Managers Index improves to 62.1

The Southeast Michigan economy is expanding at a faster rate and showing greater signs of recovery, according to a monthly survey of purchasing managers by Wayne State University's School of Business Administration and the Southeast Michigan chapter of the Institute for Supply Management.

The Southeast Michigan Purchasing Managers Index (PMI)-a composite index of local economic activity calculated from the survey data-improved in May to 62.1. Up from 57.3 in April, the increase is a result of growth in production and new orders, and improvement in employment activity.
[audio] [video]

"According to the Purchasing Managers Index, employment was flat or going down for a long time and now we've seen a big improvement over the last four months," said Nitin Paranjpe, an economist and faculty member in WSU's business school. "That tells us that we should see the unemployment rate coming down over time, and in fact it has started to decline. It reached a high of about 14.9 percent in January and it's come down to about 14 percent now," he said. [audio] [video]

Nationally, the employment index grew to its highest level in six years, suggesting that a sustained recovery in jobs is taking place. The U.S. jobless rate for May was 9.9 percent.

As factors such as production, new orders and employment have improved over the last quarter, so has purchasing managers' confidence that the local economy will continue to trend in a positive direction. More than 95 percent of purchasing managers surveyed in May expect that the economy will remain the same or become more stable over the next six months. Less than four percent expected conditions to get worse. [audio] [video]

Paranjpe pointed out that the debt crisis in Europe, and how it might affect the Michigan economy, appeared to be the greatest concern for purchasing managers in May. "There is some concern that the turmoil in Europe might spill over into economic activity in Michigan, but we don't know yet," he said. [audio] [video]

The complete Purchasing Managers Index report for May is available online at
http://www.ism-sem.org/uploaded_pics/pdf-20100603082111.pdf.

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The Institute for Supply Management - Southeast Michigan serves its members as an affiliate of the Institute for Supply Management by providing superior opportunities for education, networking, and career enhancement as a means of advancing and promoting the leading edge practices and profession of Purchasing and Supply Management.

The School of Business Administration at Wayne State University provides quality business
education through degree programs accredited by AACSB International. Wayne State University is a premier urban research university offering more than 350 academic programs through 13 schools and colleges to nearly 32,000 students.