Economics Dept.: Purchasing Managers Index Jumps
The Southeast Michigan Purchasing Managers Index expanded to 65.0 in September, rebounding from a score of 54.2 in August.
This is the fastest expansion rate in the local economy since June, according to the monthly survey of the region's purchasing managers. The three-month average is 58.6.
The Southeast Michigan PMI is a composite index of local economic activity calculated from survey data compiled by Wayne State University School of Business Administration faculty and the local chapter of the Institute for Supply Management. Like the national version of the index, a score above 50 indicates economic expansion. The higher the score is above 50, the faster the growth rate.
The local PMI showed faster growth in production, new orders and employment in September. Employment expanded at the fastest rate this year, coming in at 66.7.
"The Southeast Michigan PMI shows local economic expansion for eight consecutive months, and the economy is still growing," said Nitin Paranjpe, an economist and supply chain faculty member at Wayne State's business school who analyzed the survey data. "Chicago's PMI also rebounded sharply in September, easing fears of a double-dip recession, at least in the Midwest."
Nationally, the PMI for the manufacturing sector expanded for the 14th straight month in September, but at a slower pace than in August.
About 86 percent of the local purchasing managers surveyed said they expect the local economy to improve or remain about the same over the next six months. Comments from survey participants suggested the sustained economic growth caught them by surprise.
Paranjpe said many respondents mentioned issues with capacity and increasing lead times due to sudden increases in demand, pointing to further sustained growth.
Though the September employment PMI showed its highest value this year, purchasing managers continued to express concern about the unemployment rate. Health care costs, health care reform and federal government tax extensions were additional issues highlighted by survey respondents, creating some uncertainty going forward.
The complete Purchasing Managers Index report for September is available online at www.ism-sem.org/uploaded_pics/pdf-20101004185003.pdf.
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