Supply manager sentiments fell last month as nearly half expect a recession to strike this year, according to Creighton University’s Mid-America Manufacturing Index.
Creighton’s Mid-America Business Conditions Index fell to 46.1 from 50.8 in June, its lowest mark since May 2020 and the first time the reading has fallen below the growth-neutral score of 50 in six months. According to the survey, 45.9 percent of supply managers expect a recession to begin during the second half of this year.
Economic optimism remained at a weak reading of 32.6 as approximately 44 percent of supply managers anticipate economic growth will decline in the next six months. “Creighton University’s survey results indicate that contrary to the Federal Reserve consensus, a recession in 2023 is still ‘on the table,’ said Ernie Goss, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister chair in regional economics in the Heider College of Business.
“I expect weak readings from surveys such as Creighton’s between now and the middle of September to push the Federal Reserve to cease rate hikes at their interest rate setting committee meeting on Sept. 19-20,” Goss added.
The regional hiring index fell to 45.6 from 50. According to the U.S. Bureau of Labor Statistics, seasonally-adjusted regional manufacturing employment has fallen for two straight months. The survey indicated that job losses will rise in the months ahead. “For some time, Creighton’s monthly survey has indicated steady employment growth and levels have been maintained due to manufacturers’ labor hoarding,” Goss said. “However, this month’s hiring gauge is a signal of July layoffs in the region.”
July’s wholesale inflation gauge fell 15 points to 52.2. Supply managers still expect wholesale prices for the products and services their firms purchase to increase by nearly 5 percent over the next 12 months.
The survey tracks the sentiments of supply managers in nine states, including Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
Other report findings included:
- The regional inventory index remained essentially unchanged at 52.3.
- New export orders fell to 30.8 from 42.3 in June, even as U.S. International Trade Association data indicated that regional exports grew in the first five months of the year. July imports fell 23 points to 35.3.
- The production or sales index fell to 41.3 from 50. “Manufacturing firms have been expanding inventory levels since the beginning of February this year,” Goss said. “This has supported moderate sales growth in the region.”