Business confidence readings are at their lowest levels since the pandemic began, according to Creighton University’s January Mid-America Business Conditions Index.
Despite dropping to 56.2 from December’s 64.6, the Business Confidence Index remained above growth-neutral expectations for the 20th straight month. Any reading above 50 on the 100-point scale, a mathematical average of indices for new orders, production of sales, employment, inventories and delivery lead time, is considered positive.
Economic optimism, however, fell to 36.2 — the lowest reading since the start of the pandemic and down nearly 30 points from December’s strong 64. Business leaders were also relatively pessimistic about regional unemployment (43.6), the weakest reading since 2020 and the third straight decline in the monthly index.
Manufacturing remains strong in the Midwest despite shedding 16,000 jobs over the past year compared to pre-pandemic levels. Those losses have been seen across the region, including nearly 6 percent in Oklahoma; 3.2 percent in Kansas; and 1 percent or lower in Minnesota, Missouri, South Dakota and North Dakota. Only Arkansas, Nebraska and Iowa saw slight gains in manufacturing jobs.
Inflation readings remain at their highest levels in decades. The wholesale inflation gauge for the month jumped to 87.5 from 82.7, according to Ernie Goss, director of Creighton’s Economic Forecasting Group. Commodity prices have jumped 20.2 percent over the last 12 months, with fuel costs spiking nearly 38 percent, farm products increasing by 26.7 percent, and metal products soaring by 32.4 percent.
According to the report, approximately one-third of supply chain managers anticipate supply chain disruptions, one of the drivers of inflation, will worsen this year. Only 12 percent expect improvements. Goss expects the Federal Reserve will raise interest rates before its next meeting in March to combat high inflation.