Regional manufacturers ended last year on a high note despite the potential for trade conflicts involving several countries, according to Creighton University’s Mid-America Business Conditions Index.
The index increased to 51.1 from 48.7 in December, which followed seven months of below-50 readings. Any reading above 50 indicates growth sentiments. The index tracking economic confidence for the next six months increased to 61.4 from 52.8 in December as approximately half of supply managers anticipate business conditions will improve.
January’s price gauge increased to an eight-month high of 62.0 from 57.1 in December. Goss expects the Federal Reserve will keep interest rates unchanged following its next meeting, March 18-19. “The regional inflation yardstick has clearly moved into a range indicating inflationary pressures are still modest but moving higher,” Goss said.
The region’s employment index increased to 51.1 from 46.4 in December following 12 straight months of job losses, according to the report. Despite weak manufacturing employment readings over the past year, approximately one in five firms reported labor shortages. National and regional manufacturers shed 93,000 and 7,900 jobs, respectively, last year.
Tariff concerns caused the import index to rise 25.4 points to 67.5. The strong dollar continued to make domestic goods less competitively priced internationally and drove the export index further under growth neutral, to 41.7 from 45.8 in December.
The regional inventory index increased to 52.8 from 49.1 in December as companies prepared for potentially higher prices amid tariffs. More than seven of 10 supply managers are concerned over President Donald Trump’s tariffs, according to the report. Following persistent tariff threats against Mexico and Canada, Trump recently announced he was holding off on tariffs against the two countries for 30 days, after they agreed to boost border security efforts.
China has reportedly threatened to retaliate following Trump’s decision to implement 10 percent tariffs on the country for allegedly not doing enough to stop the production of precursor chemicals for fentanyl.
“I remain concerned about the recently implemented tariffs, which I expect to result in job losses due to retaliation from U.S. trading partners,” said Ernie Goss, director of Creighton University’s Economic Forecasting Group.
Imports increased to a record high last month. The regional economy increased manufacturing exports nearly 1 percent year-to-date in 2024, according to the International Trade Administration.
The survey includes nine states: Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.