The Midwestern economy continues to grow even as a majority of supply managers expect a recession to strike this year, according to Creighton University’s April Mid-America Business Conditions Index.
The index rose above growth-neutral for the third straight month in April, increasing four points to 54.8. The survey, after showing recessionary warnings from November to January, has since improved and “is now pointing to positive but slow growth with cooling inflationary pressures at the wholesale level,” said Ernie Goss, director of Creighton’s Economic Forecasting Group.
Fifty-eight percent of supply managers expect a recession to start this year. “While it’s too early to tell if the Federal Reserve is achieving its soft landing, results from Creighton’s surveys over the last several months are somewhat promising on the growth and inflation fronts,” he noted. “However, the inflation reading, while moderating, serves as a negative signal for financial markets and the Federal Reserve’s interest rate outlook.”
Six-month economic expectations remain weak, as the index fell three points to 31.9. Forty-five percent of supply managers expect the pace of economic growth to drop in the next six months. The hiring index increased 2.2 points to 52.2, even as fewer than half of supply managers reported having an adequate number of applicants for job openings. Roughly 40 percent said the number of applicants and job openings were well-balanced.
Inflation showed signs of improving, falling 10 points last month but remaining high at 67.4. The regional inventory index fell four points to 54.3 as manufacturing companies started returning inventory to average levels. “This will support moderate sales growth in the months ahead,” Goss said.
The survey of supply managers covers nine states, including Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
Other report findings included:
- Trade numbers remained low in April with export orders dropping three points to 42.9. April’s import reading increased eight points to 47, indicating that imports fell but at a slower pace than in March.
- The index for new orders increased two points to 58.7, while the production or sales index rose eight points to 60.9. The index tracking the speed of deliveries of raw materials and supplies increased 10 points to 47.9, which Goss attributed to an uptick in supply chain disruptions.