Supply managers are more optimistic the economy will grow even as nearly half still expect a recession in the second half of the year, according to Creighton University’s Mid-America Manufacturing Index.
The Mid-America Business Conditions Index increased to 52.5 in April, its highest mark since last September, from 49.6 in March. The index has been above the growth-neutral score of 50 for three of the past five months.
Forty-five percent of supply managers expect a recession in the second half of this year, down from 68 percent in March, noted Ernie Goss, director of Creighton’s Economic Forecasting Group. “The overall index, much like the U.S. reading, has vacillated around growth neutral for the last five months,” Goss added. “Additionally, supply managers remained pessimistic regarding the 2024 outlook.”
The index for wholesale prices continued indicating elevated inflation, falling to 76.0 from 77.3 in March even as CPI inflation increased at a higher-than-expected 3.5 percent clip. Supply managers expect input prices to increase 5.3 percent over the next six months. Survey participants reported a 3.5 percent wage gain over the past 12 months, which was below the rate of inflation.
“The regional inflation yardstick has moved into a range indicating elevated inflationary pressures and points to price growth well above the Fed’s target for the second half of 2024,” Goss said.
The region’s manufacturing sector lost jobs for the fourth straight month. The number of layoffs and discharges jumped 24.5 percent in April, or 35,000 involuntary separations over the past 12 months. The index for employment remained relatively low, falling to 40.0 from 40.9 in March.
Other report findings included:
- The regional inventory index increased to 56.3 from 54.6 in March as manufacturers increased inventories to prepare for higher sales in the months ahead.
- Export numbers weakened in April due to the rising value of the U.S. dollar, Goss said. The index for new export orders fell to 42.9 from 53.9 in March, while April’s import reading increased to 47.4 from 44.2 the previous month.
- The production or sales index increased to 52.0 from 50.1 in March. The reading for the speed of deliveries of raw supplies and materials grew to 56.0 from 54.5 in March, indicating a rise in supply chain disruptions and delivery bottlenecks.