GVSU economist: 2017 ends with solid growth
Posted on January 05, 2018
Historically, the end of the year has sometimes been rough for the West Michigan economy, however, a Grand Valley State University economic expert said the local economy finished 2017 on solid footing.
"Business and consumer confidence remain high heading into 2018," said Brian G. Long, director of Supply Management Research in the Seidman College of Business. "Our local numbers are strong and, according to international manufacturing reports, the world economy is the strongest it's been in seven years."
Long surveyed local business leaders and his findings below are based on data collected during the last two weeks of December. See the full report here.
The survey's index of business improvement (new orders) was virtually unchanged +19 from +20. The production index edged up to +22 from +17. The index of purchases remained positive at +16, down slightly from +18, and the employment index remained in double-digit growth for 11 straight months at +15, up from +13.
Long said West Michigan's recovery from the Great Recession has relied heavily on automotive strength. "We are blessed with auto parts fabricators that can compete toe-to-toe with the rest of the world," said Long. "However, the auto industry as a whole closed out the sales year with a 5 percent loss for December sales, and a 1.8 percent loss for the entire year. We can expect auto sales to continue with the same pattern of marginal monthly declines for most of 2018."
Long said the unemployment rate for West Michigan remains well below most of the rest of the state. "The shortage of qualified workers in 2018 will continue to be a problem for West Michigan and the entire state," he explained. "If all goes well, the 'official' national rate of unemployment should edge below 3.8 percent by the end of 2018. After the slowest recession recovery in history, the wage rates have finally stated to edge up. The trend toward higher wages should continue for most of 2018."
As for the local housing market, Long said the availability of homes for sale has not come close to meeting the new demand so housing prices have skyrocketed in some areas of West Michigan.
Long added that the recently passed tax overhaul allows for billions of dollars to be repatriated and the large flow of money back into the domestic market could keep long-term rates low for the rest of 2018.
The Institute for Supply Management survey is a monthly survey of business conditions that includes 45 purchasing managers in the greater Grand Rapids area and 25 in Kalamazoo. The respondents are from the region's major industrial manufacturers, distributors and industrial service organizations. It is patterned after a nationwide survey conducted by the Institute for Supply Management. Each month, the respondents are asked to rate eight factors as "same," "up" or "down."
For more information, contact Brian Long at (269) 323-2359.