Purchasing Managers Index At Highest Value In Six Months – Era Of Falling Prices At End

DETROIT – Even though Comerica’s Economic Activity index this week reported a decline from the month before, the Southeast Michigan Purchasing Managers Index released Friday rose to its highest value in six months.

The Index spiked 7.1 points to 59.1 in March 2016, recovering from last month’s drop. The three-month average rose modestly from 54.6 to 56.1, suggesting a trend of growth for the region’s economy.

The downside is only 80 percent of survey respondents — a significant decline of 14 percent since February’s report — expressed confidence in continued economic stability.

“Even though the economy powered ahead this month, concerns are arising from both international and domestic issues. Many are fueled by the instability of political parties and the upcoming US presidential election,” said Nitin Paranjpe, a finance faculty member in Wayne State University’s Mike Ilitch School of Business, who interpreted this month’s results.

Despite this perception of uncertainty, in March the production index moved up to 61.9, the new orders index increased to 59.5 and the employment index rose to 57.3. Most notably this month, the commodity price index reached 50 for the first time since August 2015.

Although some commodities such as machine parts, pallets and expendable packaging continue a downward trend in price, March data shows that others like oil, natural rubber, butadiene, steel, aluminum, copper, molybdenum, rare earth products and housing are all up in price.

“Overall, the era of falling prices may be coming to an end,” said Kenneth Doherty, assistant vice president of procurement and strategic sourcing at WSU and an Institute for Supply Management board member. “Time will tell whether the commodity price index, which has historically been much higher, remains at 50 or above.”

The Southeast Michigan Purchasing Managers Index is a research partnership between Wayne State University’s Mike Ilitch School of Business and the Institute for Supply Management – Southeast Michigan.

The full report can be found at http://www.ism-sem.org/resources/files/Report-on-Business_March-2016.pdf.