Supply manager sentiments improved last month even as most remain pessimistic over this year’s economic outlook, according to Creighton University’s Mid-America Manufacturing Index.
The Business Conditions Index increased to 49.6 in March from 49.1 in February, remaining around the growth-neutral score of 50 for the fourth straight month. The measurement of economic optimism for the next six months increased to 41 from 33.4 in February, even as 68 percent of supply managers expect the economy to weaken over the next six months.
The lack of optimism comes as the odds of a recession continue to fall. A recession is becoming increasingly unlikely, according to the American Bankers Association Economic Advisory Committee. Federal Reserve rate cuts later this year are expected to enable 1.7 percent GDP growth this year and 1.8 percent growth in 2025.
Creighton’s regional employment index fell two points last month to 40.9 as manufacturers shed jobs for the third straight month. There were 2.1 job openings for each unemployed worker over the past 12 months, lower than the year-ago mark of 2.5. Despite stubbornly high inflation and ongoing labor shortages, only 13 percent of hiring manufacturers increased entry-level wages above the rate of inflation, Goss said.
The wholesale inflation gauge increased to 77.3 last month from 61.9 in February, its highest reading in 13 months. The Federal Reserve will not cut interest rates until late July, Goss predicted.
Other March report findings included:
- The region’s inventory index remained strong at 54.6. “Slack sales among manufacturers have resulted in higher inventories,” Goss said.
- Trade numbers improved, with the index for new export orders jumping to 53.9 from 23.9 in February. March’s import reading increased to 44.2 from 38.1 the previous month. The index for new orders increased to 47.8 from 40.5 in February, and the production or sales index increased to 50.1 in March from 42.9 the previous month.