DETROIT – During December, the Metro Detroit Purchasing Managers Index fell to its lowest level in 2008, as purchasing managers reported continued production cuts.

“While we would like to think that December might be a low point in this cycle, that is probably not the case,” said Walsh College Director of Doctoral Programs David Allardice.

Allardice, an economist, compiles the Index from a monthly survey of 800 members of the Detroit chapter of the National Association of Purchasing Managers.

“A strong 55 percent of our respondents are of the opinion that the economy over the next six months will be even less stable,” Allardice said. “Prospects for the automotive sector are still clouded by sales concerns and financial problems of the automotive manufacturers and suppliers.”

The Index, a measure of production, new orders, employment, inventory, vendor deliveries, and commodity prices, fell 2.7 points in December, to 28.4.

Employment fell by 10.3 points, to 27.8.

During December, purchasing managers reported continued drops in production (index of 20.0); new orders (index of 22.5); raw materials inventories (index of 33.8); and finished goods inventories (36.3).

The only bright spot was lower commodity prices, which they attributed to the declining level of economic activity.

The commodity price index fell 1.2 points, to 23.8. By contrast, it was at a high of 86.9 in May.

Asked which commodities had decreased in price, one survey respondent replied, “everything.”

Prices are lower for aluminum, steel, energy and petrochemicals, technology equipment, natural gas, sand, soda ash, fasteners, surcharges, zinc, resin, and plastic packaging.

Drastic reductions in United States vehicle production remained a great concern among survey respondents.

Although some purchasing managers say they have been able to manage the risks, one respondent noted: “We are going to be faced with unexpected supplier failures” in the future and are having to stay in very close contact with suppliers, sharing more business information than ever.

“It’s time for us to close ranks and find a way to be the last man standing.”

Only five of the monthly 2008 purchasing managers composite indices were above 50. Readings above 50 indicate an expansion in manufacturing activity.

During the first four months of 2008, readings were above 50.

April’s composite reading of 54.6 was the year’s highest, and the Index basically declined for the remainder of the year.

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