Supply manager sentiments fell slightly last month amid continued job losses in the regional manufacturing sector, according to Creighton University’s Mid-America Manufacturing Index.
The Business Conditions Index remained around growth-neutral for the third straight month, decreasing to 49.1 from 50.9 in January. Any mark above 50 indicates growth, while any number below signals contraction.
The region’s manufacturing sector reportedly shed jobs for the second straight month. Regional job openings fell by 156,000 or 16.3 percent while layoffs fell by 2,000, or 1.1 percent, according to the U.S. Bureau of Labor Statistics. All nine states in the region saw a reduction in job openings and layoffs over the past 12 months.
Only 14.3 percent of supply managers expect economic expansion to take place this year, according to the report. The employment gauge increased to 42.9 in February, one month after falling to its lowest mark since June 2020. Forty-four percent reported a shortage of job applicants, while 13 percent said their firm wasn’t hiring due to slowing economic growth, said Ernie Goss, chair in regional economics in the Heider College of Business.
The wholesale inflation gauge fell to 61.9 in February from 71.7 in January, indicating modest inflationary pressures. Approximately 60 percent of supply managers last month cited rising input prices as the No. 1 economic threat over the next six months.
“Even though the inflation rate and job growth have been trending lower, I do not expect a Federal Reserve rate cut until June or July of this year,” Goss said. Fed Gov. Christopher Waller said last month that the FOMC should wait a little longer before reducing interest rates. He sees the delay as necessary to ensure that inflation is on a sustainable path to the FOMC’s long-term 2 percent target.
The index tracking economic optimism increased to 33.4 in February from 31.9 in January as nearly half of supply managers expect business conditions to worsen over the next six months. The regional inventory index fell to 54.4 from January 58.7.
Other February report findings included:
- Trade numbers were limited for February, with new export orders falling to 23.9 from 35.8 in January. February’s import reading fell to 38.1 from 47.3 in January.
- The index for new orders fell to 40.5 from 47.9 in January.
- The production or sales index fell to 42.9 from 45.7 in January; and the speed of deliveries of raw materials and supplies dropped to 54.8 from 63.1 in January, indicating a drop in supply chain disruptions and delivery bottlenecks.