A Creighton University monthly economic survey is revealing healthy but slower growth expectations for the next three to six months for Midwest manufacturers.
The Business Conditions Index fell from 73.1 in July to 68.9 in August, according to the Mid-America Manufacturers Report. The BCI, an average of indices for new orders, production or sales, employment, inventories and delivery lead time, ranges from between 0 to 100. An index above 50 indicates expansion while an index below that number signals contraction over the next three to six months. The BCI has remained above growth neutral for 15 of the last 16 months and covers nine states: Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The survey’s measure of economic optimism dipped to 53.5 from July’s 53.6, the third straight month that the index fell. Supply chain bottlenecks represent the top challenge over the next 12 months for supply managers, and approximately 94 percent ranked soaring input prices as the second greatest challenge over the next 12 months.
“Creighton’s monthly survey results indicate the region is adding manufacturing business activity at a healthy pace, and that regional growth will remain positive, but somewhat slower. Supply chain bottlenecks and labor shortages remain obstacles to growth,” said Ernie Goss, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister chair in regional economics for the Heider College of Business.
Employment
The Regional Unemployment Index remained above growth neutral last month, but fell to 64.6 from July’s two-decade high of 67.2. Job growth belies the ongoing difficulties firms continue facing in finding and hiring new workers, Goss said. One of five supply managers reported that finding and hiring qualified workers will be the greatest challenge over the next 12 months.
“Even with strong manufacturing job growth, the region has yet to recover all job losses from the pandemic. The latest U.S. Bureau of Labor Statistics data indicate that current regional nonfarm employment is down by 431,000 jobs, or 3.3 percent, compared to pre-Covid-19 levels,” Goss said.
Wholesale prices
The wholesale inflation gauge for August fell to 95 from July’s record-high 98.7.
“At the wholesale level, Creighton’s survey is tracking higher and higher inflationary pressures. Commodity prices are up approximately 20.9 percent over the last 12 months, according to U.S. Bureau of Labor Statistics data. Supply managers in Creighton’s June survey expect prices for their firm’s products to advance by 7.7 percent for the next 12 months,” Goss said.
Inventories, trade, new orders
The Regional Inventory Index, reflecting levels of supplies and raw materials, fell to 54.9 from 70.7 in July. Regional trade numbers were positive: The New Export Orders Index expanded to 64.7 from July’s 63.9. Supply chain bottlenecks pushed the August import down to 52.4 from 65.3 the previous months.