Supply manager sentiments remained tepid even as manufacturing employment reached its lowest mark since June 2020, according to Creighton University’s January Mid-America Manufacturing Index.
The Business Conditions Index rose above the growth-neutral score of 50 for the second straight month in January — 50.9 from 50.3 the previous month. Every state in the region, except for South Dakota, reported manufacturing job losses in January.
Fewer than 10 percent of supply managers are expecting an economic expansion this year, said Ernie Goss, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister chair in regional economics in the Heider College of Business.
January’s Business Confidence Index fell to 31.9 from 35.2 in December as approximately 45.4 percent of supply managers expected business conditions to weaken over the next six months. Twenty-two percent of supply managers ranked a potential recession as their greatest threat this year, followed by 21 percent who cited finding and hiring workers and 17.4 percent who listed higher input prices.
The index for employment fell to 39.1 in January, its lowest reading since June 2020. According to the U.S. Bureau of Statistics, the region’s manufacturing sector lost 800 jobs, compared to a nationwide gain of 12,000 manufacturing jobs. Still, 43.5 percent of firms experienced a shortage of job applicants, with 13 percent reporting that their firm was not hiring due to an economic slowdown.
The index reflecting the amount of raw materials and supplies increased to 58.7 from 46 in December. Trade numbers were limited for the month as the index for new export orders fell to 35.8 from 47 in December. The index for imports increased to 47.3 in January from 36.9 in December.
The index for new orders increased to 47.9 from 40.7 in December; the production or sales index fell to 45.7 in January from 60.0 the previous month; and the speed of deliveries of supplies and raw materials fell to 63.1 from 64.8 in December, indicating a reduction in supply chain disruptions and delivery bottlenecks.
Manufactured goods exports from the nine-state region increased 4.1 percent to $86.4 billion for the first 11 months of 2023 from $82.9 billion in the same time period of 2022, according to the U.S. International Trade Administration.
The wholesale inflation gauge increased to 71.7 from 57.7 in December as supply managers expected input prices to increase nearly 6 percent this year. Goss expects weaker economic data to cause the Federal Open Market Committee to reduce its short-term interest rates at its March 19-20 meetings.