Supply manager sentiments fell in September as the majority of supply managers expect a recession to strike over the next six months, according to Creighton University’s Mid-America Business Conditions Index.
The index was below the growth-neutral score of 50 for the fifth time this year, down to 48.1 from 48.7 in August. The index has been around growth-neutral for most of this year. The index for economic optimism remained low, decreasing a half-point to 26.2 from 26.7 in August. Sixty-two percent of supply managers expect worsening business conditions or a recession over the next six months.
Nearly 40 percent named higher inflation as their top concern, with an average 6.2 percent increase in input prices expected over the next year. That was followed by 22 percent who cited supply chain disruptions; 13 percent who listed higher interest rates and 9 percent who cited trade skirmishes with China.
September’s employment index fell to 44.3 from 45.2 in August, the ninth straight month of falling under 50. Despite a slight drop in manufacturing employment, 18 percent of supply managers reported having a shortage of workers.
September’s price gauge increased to 56.6 from 56.2 in August, its first increase following six straight months of decreases. The Federal Reserve will cut interest rates by a quarter-point at its Nov. 6-7 meeting, said Ernie Goss, director of Creighton University’s Economic Forecasting Group.
Other report findings included:
- The regional inventory index increased to 51.4 from 45.5 in August as supply managers increased their inventories last month before dockworkers at ports from Texas to Maine announced a strike.
- The strong dollar continued to make U.S. goods less competitively priced abroad, causing the export index to fall to 49.3 from 50.0 in August. The import reading fell two points to 43.1 amid weakening regional economic conditions.
The index tracks supply manager sentiments in nine states: Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.