The Midwest manufacturing industry continues to grow as inflation and supply chain shortages lessen, according to Creighton University’s October Mid-American Economy report.
Creighton’s Business Conditions Index increased one point to 53 in October, only its second increase in the last seven months. The BCI has remained above growth-neutral for 29 straight months.
The wholesale inflation gauge fell six points to 65, its lowest reading since August 2020. Though year-over-year inflation remained high in October at 8.2 percent, core PCE inflation is expected to fall both next year and in 2024. Supply managers expect prices for inputs and supplies to increase by only 2.5 percent in the next six months. Only one-third of supply chain managers said supply chain disruptions as their No. 1 challenge, far less than the 58 percent who said the same in August.
“As global commodity prices have stabilized at lower levels, so has inflation,” 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. At its most recent meeting, the Federal Open Market Committee raised interest rates by an additional 75 basis points today, bringing the target rate to 3.75 to 4.00 percent.
Despite the lower inflation readings, economic confidence over the next six months still fell 11 points to 18 as recessionary fears continued, its lowest reading since pandemic shutdowns began in March 2020.
The report includes a survey of supply managers in nine states, including Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.