New Grand Valley State University survey shows improving manufacturing activity in West Michigan as economists warn global tensions could quickly reshape the outlook.

GRAND RAPIDS — Michigan’s manufacturing economy may be showing early signs of stabilization after several months of uncertainty, according to new data from Grand Valley State University, but economists say global risks — including the expanding conflict involving Iran — could quickly reshape the outlook for businesses across the state.

A February survey of West Michigan purchasing managers showed a rebound in several key indicators including new orders, production and hiring expectations, suggesting that the region’s manufacturing sector may be regaining momentum after a slowdown late in 2025.

The data was compiled by Brian Long, director of supply management research at Grand Valley State University’s Seidman College of Business, who conducts monthly surveys of purchasing managers across West Michigan’s manufacturing base.

“Our February survey statistics came in positive, but the mood of some of our respondents remains cautious, especially among firms that have international exposure, given that the underpinning of the entire world economy seems to be changing on almost a daily basis,” Long said.

While the February data suggests improving sentiment among manufacturers, Long cautioned that businesses remain wary of ongoing economic volatility tied to tariffs, supply chain shifts and geopolitical tensions.

Key Business Indicators Turn Positive

Several of the region’s core business metrics moved back into positive territory during February.

Among the most significant changes:

  • New orders index: +10 in February, up from -11 in January

  • Production index: +8 in February, compared with -5 in January

  • Employment index: +2 in February, up from -2 in January

  • Lead times index: +9 in February, compared with +4 in January

The improvement in new orders is particularly significant because it often signals stronger production and hiring in the months ahead.

Long said some of the improved sentiment may be tied to easing uncertainty surrounding tariffs and cost pressures. A recent U.S. Supreme Court ruling involving tariffs and cost restraints helped reduce some uncertainty facing manufacturers.

“Despite all the current economic turmoil, our West Michigan Short Term Business Outlook Index, which asks firms about their perceptions over the next three to six months, ticked up in February and was noticeably higher than the negative reports we received for several months before Christmas,” Long said.

Michigan Economy: Key Risks to Watch in 2026

Economists say several factors could shape Michigan’s economic outlook this year:

• Global oil prices tied to Middle East tensions
• U.S. auto sales and consumer demand
• Interest rate policy and borrowing costs
• Global trade and tariff disputes
• Manufacturing supply chains

Because Michigan’s economy is heavily tied to manufacturing and the automotive industry, global economic shifts often appear in the state earlier than in the broader U.S. economy.

Automotive Industry Remains a Key Driver

Michigan’s manufacturing economy continues to be heavily influenced by the performance of the automotive sector, which remains the state’s largest cyclical industry.

Despite concerns entering 2026 that higher borrowing costs and economic uncertainty might dampen vehicle sales, the automotive market has proven more resilient than expected.

“For West Michigan, our largest cyclical industry continues to be automotive,” Long said. “According to recent reports, auto sales continue to hold up better than expected, and we can hope our local auto parts suppliers will continue to pick up some new contracts.”

West Michigan is home to hundreds of automotive suppliers producing plastics, metal components, electronics and advanced materials used throughout the North American auto industry.

Still, the state’s reliance on automotive manufacturing also means Michigan tends to feel global economic shifts earlier than many other states.

Economic Conditions Vary Across Michigan

While West Michigan’s manufacturing sector showed signs of improvement, economic conditions vary significantly across different regions of the state.

Southeast Michigan, anchored by Detroit’s automotive and mobility industries, continues to benefit from strong vehicle demand and ongoing investment in electric vehicles, advanced mobility technologies and defense manufacturing.

However, many suppliers remain under pressure from rising input costs, labor shortages and uncertainty surrounding global trade policies.

In Central Michigan, economic activity is closely tied to agriculture, food processing and chemical manufacturing, including operations linked to companies such as Dow and Hemlock Semiconductor. Commodity prices and global chemical demand remain important economic drivers for the region.

Meanwhile, Northern Michigan has experienced growth tied to tourism, healthcare and an influx of remote workers relocating from larger metropolitan areas since the pandemic.

The Upper Peninsula economy continues to rely heavily on mining, forestry, tourism and energy development, including emerging investments in battery materials and renewable energy projects.

Despite these regional differences, economists say Michigan’s economy remains highly sensitive to global manufacturing cycles.

How Iran Conflict Could Affect U.S. Gas Prices

Energy analysts say an escalation involving Iran could disrupt oil shipments through the Strait of Hormuz, one of the world’s most critical energy corridors.

About 20 percent of global oil supply passes through the narrow shipping route.

If shipping were disrupted, oil prices could rise sharply.

Possible scenarios economists often cite:

• Oil at $100 per barrel — U.S. gas prices could approach $3.80–$4.00 per gallon
• Oil at $120 per barrel — gas prices could climb toward $4.50 per gallon
• Major supply disruption — prices could potentially approach $5 per gallon

For Michigan drivers and manufacturers, higher fuel costs could ripple across the economy, raising transportation costs, increasing shipping expenses and adding new pressure on manufacturers already facing tight margins.

Global Uncertainty Looms Over Economic Outlook

Even as some economic indicators improve, business leaders are increasingly watching geopolitical developments that could affect global supply chains and energy markets.

One of the biggest emerging concerns is the expanding conflict involving Iran, which could disrupt global oil supplies and shipping routes.

Roughly 20 percent of the world’s oil supply moves through the Strait of Hormuz, a narrow shipping corridor near Iran that is considered one of the most strategically important energy routes in the world.

Any disruption to shipping through the region could push global oil prices significantly higher.

Higher energy prices would ripple quickly through the U.S. economy, increasing transportation costs, raising gasoline prices and adding pressure on manufacturers already coping with elevated borrowing costs and supply chain disruptions.

For Michigan — where manufacturing, logistics and automotive production play major economic roles — those effects could be felt quickly.

“Michigan has always been closely tied to global industrial cycles,” Long said. “When the world economy shifts, Michigan tends to feel those changes relatively quickly.”