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Southern Michigan Making Gains

Mon, 12/20/2010 - 5:11am

Lauren KiesowBy LAUREN KIESOW, Associate Editor, Manufacturing.net

In the world of manufacturing, it’s no secret that the Institute of Supply Management’s (ISM) monthly Report On Business gives the current pulse of the state of manufacturing for the entire United States.

At the beginning of every month, manufacturers tune in to see what the Purchasing Managers’ Index (PMI) score is for the preceding month. A PMI over 50 illustrates growth or expansion within the manufacturing sector of the economy. A reading under 50 represents contraction, while a reading right at 50 indicates an equal balance of gains and declines in business.

Throughout the last few years, manufacturing has taken more than its share of hits due to the economic recession, with national scores dipping well below 50 at some points. And while the National Bureau of Economic Research cites June 2009 as the official end of the recession, one would be hard pressed to find a manufacturer who would agree wholeheartedly despite what the national numbers say. But, as manufacturers are pulling themselves up by their bootstraps once again, it is encouraging to see national PMIs consistently above 50.

However, while the national report gives a nice overarching synopsis of the country as a whole, it doesn’t say much — if anything — about the conditions of specific areas. Luckily, there are various regional purchasing reports that narrow the scope and report relevant data pertaining to a particular region.

One notable example comes from the Southeast Michigan Purchasing Managers’ Index. Their score for October is 67.1, up for the eighth straight month and 10.2 points above the national score of 56.9.

Compiled by Wayne State University School of Business Administration and the Southeast Michigan chapter of the Institute for Supply Management, metro Detroit's economy is displaying signs of sustained improvement. They accredit strong improvement in increased production and new orders as the trigger for their growth. Additionally, they’ve seen solid progress in employment as well.
Throughout the roller-coaster ride that was the recession, Southeast Michigan hit a devastatingly low PMI of 28.4 in December 2008. The PMIs preceding and proceeding that low weren’t great either. Since that bleak time, the Detroit area has struggled to recoup its losses and continuously make gains.

One company trying to do its part is General Motors. Due to its expanding product line, GM is helping to create jobs in the area. Also, consumer confidence is rising, showing a renewed demand for automobiles and further spurring production.

It’s probably safe to say Southeastern Michigan is not the only region experiencing progress. But, it is heartening to see at least one region overcome a bout of lows and deliver higher-than-national scores.

What’s your take? Let me know via e-mail at lauren.kiesow@advantagemedia.com.

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