The Midwestern economy remains strong but will likely face ongoing headwinds due to high inflation and the war in Eastern Europe, according to Creighton University’s March Business Conditions Index.
The BCI, a composite measure of new orders, production or sales, employment, inventories and delivery lead time, soared seven points to 71.3 on a 100-point scale in March. “Creighton’s monthly survey results indicate the region continues to add manufacturing activity at a very healthy pace, but with modest job additions,” said Ernie Goss, director of Creighton’s Economic Forecasting Group and the Jack A. MacAllister chair in regional economics in the Heider College of Business.
For Midwest-based supply managers, economic confidence for the next six months jumped 12 points but remained low at 31.7, due to the ongoing war in Ukraine, soaring inflation, supply chain shortages and higher interest rates. Despite those fears, the employment outlook remained positive: The related index increased for the second straight month, this time four points to 60.6. Goss noted that supply managers on average expect wages to grow less than 3 percent this year. “Given the shortage of workers, this restrained increase is surprising,” he noted.
The survey’s wholesale inflation gauge for March soared to 95.5, its highest since last October and a 15-point jump from February. Commodity prices have jumped 20.3 percent over the last 12 months; farm products by nearly 25 percent; metal products by nearly 33 percent; and fuels by nearly 40 percent. Seven of 10 supply managers ranked supply disruptions as their top threat for this year. Twenty percent said inflation and higher interest rates were their No. 1 challenge. Inflation was measured at nearly 8 percent in February, the largest 12-month increase since January 1982. To combat the decades-high increase, the Federal Open Markets Committee increased interest rates to between 0.25 percent and 0.5 percent. Goss said he expects the FOMC to hike interest rates again next month, this time by 0.5 percent.
States included in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.