Supply managers say the economy is growing even as they remain pessimistic over expected economic conditions in the next six months, according to Creighton University’s July Mid-America Manufacturing Index.
Creighton’s business conditions index fell to 50.7 from 51.3 in June, its seventh month of being above the growth-neutral score of 50 so far this year. “The overall index, much like the U.S. reading, has vacillated around growth neutral since December 2023,” said Ernie Goss, director of Creighton’s Economic Forecasting Group.
The index for economic optimism over the next six months fell to 30.6 from 34.2 in June and 33.2 in May. Supply managers remained pessimistic over the economic outlook, with 44 percent saying the industry was either in a recession or expecting a downturn to strike before the end of the year. Only 11 percent expect growth over the next six months.
The wholesale price gauge dropped for the fifth straight month, to 59.9 from 61.4 in June, which indicates falling inflation, Goss noted. CPI inflation increased 3 percent in June, lower than 3.3 percent in May. Supply managers expect input prices to increase 2.3 percent in the next 12 months, which is little more than half of the 4 percent increase over the past year.
Goss expects the Federal Reserve will cut interest rates at least twice this year amid weak economic growth and cooling inflation.
The region’s employment index fell below 50 for the seventh straight month, increasing to 49.7 from 44.0 in June. Unemployment increased to 4.3 percent in July from 4.1 percent, its highest mark since the fall of 2021.
The regional inventory index, which reflects levels of raw supplies and materials, fell to 50.8 from 57.3 in June. “As a result of falling sales expectations, supply managers reduced their supplies of raw materials and other inputs,” Goss said.
Even as the strong dollar continued making U.S. goods less competitively priced internationally, the export index increased to 51.5 from 45.3. The weakening regional economy caused the import reading to drop to 47.6 from 52.2 in June.
Year-to-date regional manufacturing exports increased 10.3 percent to $43.9 billion from $39.7 billion for the same period in 2023, according to the U.S. International Trade Administration.
The index for new orders increased to 51.1 from 49.0 in June; the production or sales index fell to 49.3 in July from 54.3; and the speed of deliveries of raw materials and supplies increased to 52.7 from 52.1, indicating a small rise in supply chain disruptions and delivery bottlenecks.
