Manufacturing in West Michigan took a downward turn in July.
That's according to the latest Institute for Supply Management survey from Grand Valley State University.
The survey of manufacturers shows that new orders "dropped substantially" last month.
“Regrettably, the pace of the West Michigan industrial economy has now turned negative,” wrote Brian Long, director of Supply Chain Management Research at GVSU.
"What we are looking at right here is those tariffs we've been talking about for a long time," says Brian Long, director of Supply Chain Management Research at GVSU.
The survey asks purchasing managers at manufacturing, distribution and industrial service companies about current business conditions. The responses are then indexed.The index for new orders dropped to -13 in July, compared to +10 in June. A declining index is one early sign that companies don’t have as much new business coming in.
Long says he fears the drop for the month could signal a trend.
“My unfortunate thought is that it’s probably part of a trend," he said. “What we are looking at right here is those tariffs we’ve been talking about for a long time.”
Long says the manufacturers he talked to were hopeful the tariff disputes that started this year would blow over.
“But unfortunately this month, the tariffs are not only starting to bite, but there’s that uneasy feeling that it’s going to be a long time now before we have a solution to this tariff war,” he says.
Long says tariffs are the primary reason the index of new orders dropped for July. He says the concerns over Brexit and a slowdown in Europe are also concerns for companies.
Despite that, employment continued to rise across most of Michigan in June. And the GVSU survey showed only a slight decline in the index for industrial employment in July.
Long says he doesn’t expect employment to drop right away.
“There’s still going to be a tight market for some time,” Long says. “Because employment, unemployment, that whole sector is a laggard as far as the economy is concerned. I’ve seen instances where we’re quite obviously in a recession and a company keeps right on hiring because they had the budget to do it, and the recession hasn’t hit them yet, or they think they’re exempt from the recession or whatever.”
You can read the full survey report here.
