Prepared by David G. Sowerby, CFA
Loomis, Sayles & Company, LP

The Greater Lansing Business Index has rebounded from the lower levels of last fall, with a more meaningful gain in January and February. The six-month smoothed number, which is adjusted for monthly volatility, hit a trough level in September 2006 and has recovered well. One should note that it takes longer to see the up and down movement materialize in the smoothed index, so the fact that it is up 4.5 percent from September’s low is encouraging.

The April index of 122.7 is based on data through February 2007, the most current statistics available. A year ago, the index reading for February 2006 was 110.3.

Several variables have boosted the most recent Business Index. First, car production is rising as GM’s Delta Township assembly plant ramps up to full production. Energy usage also increased in the colder months of January and February, in contrast to a warmer than normal December. Finally, local stock prices were up as well.

The remaining three variables—residential housing units sold, hotel occupancy and Ingham County employment—were flat or slightly positive.

Looking at the statewide economy, Michigan’s business climate is still slow, primarily because of the auto sector. The non-auto sector is witnessing positive growth. For example, non-auto corporate profits grew 8 to 11 percent in the third and fourth quarters versus year ago levels. Finally, Michigan has experienced rising stock prices in 2007, which has been a positive surprise. Year to date, Michigan stocks are outpacing the S&P 500.

What is the Greater Lansing Business Index?
Recognizing that the mid-Michigan business climate is unique, The Greater Lansing Business Monthly launched the Greater Lansing Business Index in 2003 to assist business owners and managers in assessing the health of the local economy. Instead of relying on state and national figures used in most economic measurements, the Greater Lansing Business Index strives to provide a true picture of the local marketplace. With a baseline of 100 established on January 1997, an increase in the index indicates growth. To capture a wide sample of mid-Michigan’s diverse economic base, it combines the following local economic variables:

1. Residential housing units built (seasonally adjusted)

2. Motor vehicle production (seasonally adjusted)

3. Hotel occupancy rates (seasonally adjusted)

4. Kilowatt per hour usage (seasonally adjusted)

5. Ingham County employment

6. Local area stock prices

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