Supply manager sentiments fell once again in December as recessionary fears continued to grow, according to Creighton University’s Mid-American Economy report.
The Business Conditions Index fell by one point to 47, the second straight month that the reading has been below the growth-neutral score of 50. Approximately 60 percent of supply managers said the economy will fall into a recession this year.
“Creighton’s monthly survey of manufacturing supply managers is flashing recession warnings for 2023,” said Ernie Goss, director of Creighton’s Economic Forecasting Group and the Jack A. MacAllister chair in regional economics in the Heider College of Business. “Not since April and May of 2020, the middle of the 2020 recession, has the overall index fallen below growth neutral for two straight months.”
December’s employment index increased nine points to 54 amid strong economic activity, despite regional manufacturers only adding jobs at a limited pace. Labor shortages continued across the Midwest: Approximately 63 percent of firms with job openings reported a shortage of applicants. The current regional labor force remains approximately 1.5 percent below pre-pandemic levels.
Economic optimism remained stunted in December as the related index fell two points to 23. Goss noted that indices for this year are in their worst stretch since the Great Recession.
The wholesale gauge for inflation fell 20 points to 52, its lowest reading in more than 2 1/2 2.5 years. Goss said the reading, which indicates reduced inflation, likely means that the Federal Reserve Open Market Committee will raise interest rates by 0.25 percent at its next meeting in a few weeks. The FOMC has raised interest rates from near-zero at the start of the year to between 4.25 percent and 4.5 percent in December.
The monthly report, taken since 1994, includes Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.