The Midwest economy grew for the third month this year in June, according to Creighton University’s Mid-America Business Conditions Index.
The BCI, which covers a nine-state region from Minnesota to Arkansas, increased to 51.3 from 48.2 in May. Any reading above 50 indicates economic growth.
Economic optimism for the next six months increased to 34.2 from 33.2 in May, according to the business confidence index. Forty eight percent of supply managers expect business conditions to worsen for the rest of this year, up from 42 percent in May. The June employment index rose to 44.0 from May’s 43.7.
The wholesale price gauge fell to 61.4 from 70.8 in May, pointing to cooling inflationary pressures. “The regional inflation yardstick has moved into a range indicating inflationary pressures moving toward the Federal Reserve’s target for the second half of 2024. As a result, I expect the Fed to cut interest rates at its September meetings,” said Ernie Goss, director of Creighton University’s economic forecasting group.
The region’s manufacturing sector exported $29 billion as of June, according to the report, up from $27.8 billion in June 2023. As the value of the U.S. dollar rose, the export index fell to 45.3 from 46.7 in May. The import reading increased to 52.2 in June from 41.2 the previous month.
Supply manager sentiments on international purchasing were mixed. Some reported buying little offshore, while others said domestic producers were having ongoing production issues that made them unreliable, making purchasing raw materials overseas the only alternative. Forty two percent of supply managers reshored a portion of their purchasing, according to the report, while 6 percent returned all their international purchases to the United States.
Inventories of raw materials and supplies expanded, as the regional inventory index increased to 57.3 from 55.6 in May. According to the report, it is uncertain whether the buildup is a result of anticipating future sales or a decrease in current sales.
