Supply managers say the Midwestern economy remains strong, but optimism is sinking as Russia’s recent invasion of Ukraine continues, according to Creighton University’s monthly Mid-America Business Conditions Index.
Though the BCI climbed eight points to 62 in February, supply manager fears over the economic ramifications of Russia’s invasion dropped the index to its lowest level in its 28-year history — 19.5 on a 100-point scale. As reported by the Wall Street Journal, those fears might not come to pass. A recent uptick in U.S. economic activity and large job gains suggest the United States is in a position to withstand the economic shock.
Still, Midwest supply managers say pandemic-era supply chain shortages and employee shortages remain top concerns: 43.5 percent ranked supply disruption as their No. 1 challenge in 2022, followed by more than one-third who said finding and hiring qualified workers is this year’s top issue. Creighton’s wholesale inflation gauge, despite falling seven points to 80 in February, remains historically high as inflation continues at its highest rate in four decades. According to the Bureau of Labor Statistics, commodity prices soared by nearly 20 percent over the last 12 months; fuels by 35 percent; farm products by 20.5 percent; and metal products 38 percent.
“The region continues to add manufacturing activity at a healthy pace, but with only 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. “The Russian invasion into Ukraine will lengthen supply chain disruptions and push commodity prices upward. Interruptions in trade flows will also weaken the regional recovery which was already slowing significantly.”
Other measurements from the index, which includes new orders, employment, inventories and economic factors, are:
- The regional employment index spiked 13 points to 56.6 in February.
- After falling below growth-neutral for January, the employment index grew to a positive reading indicating manufacturing job growth.
- The regional inventory index, reflecting levels of raw materials and supplies, fell seven points to 52 in February.
- The new exports order index sank six points to 50, while the regional import index fell seven points to 43.
- New orders rebounded 14 points to 65; the production or sales index soared 18 points to 66.
States included in the survey include Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.