Supply manager sentiments remained tepid in November amid lingering economic pessimism, according to Creighton University’s November Mid-America Manufacturing Index. The Business Conditions Index fell to 49.6 from 51.1 in October, the sixth time this year it has fallen below the growth-neutral score of 50. The index has remained around 50 all year.
The index tracking economic optimism for the next six months increased to 55.6 from 47.1 in October. Despite the rise in optimism, 41 percent of supply managers expect a recession or a steep drop in economic activity over the next six months.
The strong dollar continued to make U.S. goods less competitively priced internationally, causing the export index to fall to 45.5 from 47.7. The import reading remained at 49.1. Year-to-date exports for the regional manufacturing sector increased 2.6 percent or $1.9 billion from the same period in 2023.
Thirty-nine percent of supply managers cited supply chain disruptions as the No. 1 economic challenge for their firms over the next year amid a potential longshoremen strike next month, according to the report. Longshoremen went on strike from Oct. 1-Oct. 3 after negotiations broke down between the International Longshoremen’s Association and the United States Maritime Alliance over diverging views on port automation and pay. Further strike activity was suspended for 90 days until Jan. 15, while negotiations continued. The index tracking levels of raw materials and supplies increased to 51.8 from 48.5 as inventory levels increased amid the potential strike.
The region’s employment index fell below growth neutral for the 11th straight month, increasing to 44.4 from 44.2 in October. Regional manufacturing employment has fallen by 0.2 percent or 2,000 jobs so far this year, while U.S. manufacturing employment has dropped 0.7 percent or 90,000 jobs.
“Manufacturers in the nation and region continue to shed jobs,” said Ernie Goss, chair in regional economics in Creighton’s Heider College of Business.
Twenty-eight percent reported higher inflation as their top economic threat, followed by 11 percent who identified labor shortages. November’s price gauge remained strong, rising to 56.6 from 56.5 the previous month. The Federal Reserve will leave interest rates unchanged later this month, predicted Ernie Goss, chair in regional economics at Creighton University’s Heider College of Business. The Federal Open Market Committee cut interest rates 0.25 percent last month to between 4.50-4.75 percent. That followed the FOMC’s half-percentage- point cut in September.
“The regional inflation yardstick has clearly moved into a range indicating inflationary pressures moving toward the Federal Reserve’s target,” Goss said.
Other November report findings included:
- The index for new orders fell to 48.6 from 49.4.
- The production or sales index dropped to 48.2 from 54.1 in October.
- The speed of deliveries of raw supplies and materials fell to 55.2 from 59.5, indicating declining supply chain disruptions and delivery bottlenecks.