GRAND RAPIDS – Michigan’s economy continues to expand, but new data from West Michigan suggests employers may be becoming more cautious about hiring as concerns grow over consumer spending, global uncertainty and the future direction of the manufacturing sector.
A monthly survey conducted by Grand Valley State University’s Seidman College of Business found West Michigan manufacturers posted a fourth consecutive month of modest growth in May. However, the survey also revealed the region’s employment index turned negative for the first time in months, raising concerns that job growth may be slowing even as overall business activity remains positive.
The findings mirror broader statewide forecasts that predict Michigan will avoid a recession but face a period of slower economic growth and a softer labor market through the remainder of 2026.
“At some point, consumer confidence will get low enough that it’ll spill over into the industrial economy,” said Brian Long, director of supply management research at GVSU’s Seidman College of Business. “At that time, businesses will start reassessing what the future looks like, and we are in more danger of having more and bigger layoffs.”
By The Numbers
West Michigan Purchasing Managers Survey – May 2026
- New Orders Index: +15 (unchanged from April)
- Production Index: +14 (down from +22)
- Employment Index: -4 (down from +13)
- Lead Times Index: +22 (up from +7)
A positive number indicates expansion while a negative number suggests contraction.
The survey’s employment index represented the most significant change in May’s report. While new orders remained steady and production continued to grow, employers reported a pullback in hiring activity.
Long said state unemployment figures also suggest a labor market that is becoming less robust than it was two years ago.
“Our West Michigan employment index for May has now turned slightly negative, and the official unemployment numbers that we are getting out of Lansing are about one percentage point higher than they were two years ago,” Long said.
Statewide Forecasts Show Slower Growth
The caution emerging from West Michigan aligns with forecasts released by economists at the University of Michigan and other research organizations across the state.
Michigan’s economy is expected to continue growing this year, but at a slower pace than many economists anticipated following the 2024 election cycle. Manufacturing remains under pressure from high interest rates, global trade uncertainty and slowing demand in some sectors.
The University of Michigan’s economic forecast projects statewide job growth will remain largely flat through much of 2026 before improving in 2027. Healthcare, government employment and professional services are expected to add jobs, while manufacturing employment remains vulnerable to continued restructuring.
For Southeast Michigan, home to the state’s automotive industry, uncertainty surrounding tariffs, electric vehicle adoption rates and consumer demand continue to cloud the outlook.
Automotive suppliers remain especially sensitive to fluctuations in vehicle production schedules, making Southeast Michigan one of the regions economists are watching most closely.
Different Challenges Across Michigan
While manufacturing remains a major driver in West and Southeast Michigan, other regions face different economic realities.
In Central Michigan, employers continue to report labor shortages despite slowing population growth. Healthcare systems, educational institutions and government employers remain major sources of stability, particularly around Lansing and university communities.
Northern Michigan continues to benefit from tourism, retirees and remote workers relocating from larger metropolitan areas. However, housing affordability and worker shortages have become major constraints on growth, particularly in resort communities such as Traverse City and Petoskey.
The Upper Peninsula faces similar workforce challenges while relying heavily on tourism, mining, forestry and healthcare employment. Infrastructure investment and seasonal tourism continue to support economic activity across the region.
Consumers May Hold The Key
While business leaders remain cautiously optimistic, many economists say the biggest question for the second half of 2026 may be the American consumer.
Recent national surveys show consumer confidence weakening amid concerns about inflation, interest rates and global instability. If consumers reduce spending, manufacturers often feel the effects several months later through declining orders and production schedules.
Long said local business sentiment remains positive for now, but he acknowledged that confidence could shift quickly if economic conditions deteriorate.
“The industrial economies at the local, national and international levels all appeared to be modestly solid,” he said. “Much of the recent enthusiasm from the survey respondents is apparently predicated on the optimism that the Iran war could be over at any moment, resulting in the economy bouncing to meet the good news.”
For now, Michigan’s economy appears to be continuing its slow expansion. The bigger question is whether employers continue adding workers or begin preparing for a more challenging economic environment ahead.
The answer may determine whether Michigan experiences another year of modest growth—or a broader slowdown in hiring that reaches households across the state.
