The Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, fell but remained above growth neutral for 20th straight month.
Overall Index: The Business Conditions Index, which uses the identical methodology as the national ISM, ranges between 0 and 100, dropped to 56.2 from December's healthy 64.6.
"Creighton's monthly survey results indicate the region is adding manufacturing activity at a positive pace, but with much weaker job numbers for the month. In terms of supply chain disruptions and bottlenecks for the first half of 2022, approximately one-third of supply managers expect delays to worsen with only 12% anticipating improvements," said Ernie Goss, Ph.D., director of Creighton University's Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.
Employment: The regional employment index plummeted to 43.6, its weakest reading since June 2020, from 59.3 in December, and the third straight decline in the monthly index.
"Despite healthy growth over the past year, compared to its pre-pandemic level, U.S. Bureau of Labor Statistics employment data indicate that the region has lost 16,000 manufacturing jobs, or 1.1%," said Goss.
Other January comments from supply mangers were:
- "The domestic energy industry needs positive signals from current administration to be confident that they can ramp up production."
- "We are still in the 'muddling through it' phase."
- "Too bad we are all suffering from an economy that could have been avoided under another administration and Congress."
Wholesale Prices: The wholesale inflation gauge for the month climbed to 87.5 from December's 82.7. "Creighton's monthly survey is tracking the highest and most consistent inflationary pressures in more than a quarter of a century of conducting the survey," said Goss.
"Given current significant inflationary pressures, I expect a rate hike before the next meeting of Federal Reserve's rate setting committee on March 15-16. The Fed risk inflation getting out of hand with current short-term rates close to zero," said Goss.
"According to the U.S. Bureau of Labor Statistics, commodity prices are up approximately 20.2% over the last 12 months with fuels expanding by 37.8%, farm products advancing by 26.7%, and metal products soaring by 32.4%.
Confidence: Looking ahead six months, economic optimism, as captured by the January Business Confidence Index tumbled to 36.2, the lowest reading since the beginning of the pandemic, and down from December's strong 64.0.
Inventories: The regional inventory index, reflecting levels of raw materials and supplies, declined to 59.7 from 61.6 in December.
Trade: Despite supply chain bottlenecks, regional export numbers were positive for the month. The new export orders index sank to 56.7 from December's 60.1, while the regional import fell to 50.0 from 61.2 in December.
Other survey components of the January Business Conditions Index were: new orders slumped to 51.7 from 66.7 in December; the production or sales index sank to 48.3 from 53.8 in December; and the index reading for the speed of deliveries of raw materials and supplies decreased to 77.8 from December's 81.5. A lower reading indicates a reduction in supply chain disruptions and delays.
The Creighton Economic Forecasting Group has conducted the monthly survey of supply managers in nine states since 1994 to produce leading economic indicators of the Mid-America economy. States included in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The forecasting group's overall index, referred to as the Business Conditions Index, ranges between 0 and 100. An index greater than 50 indicates an expansionary economy over the course of the next three to six months.
The Business Conditions Index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time. This is the same methodology, used since 1931 by the Institute for Supply Management (ISM), formerly the National Association of Purchasing Management. The Mid-America report is produced independently of the national ISM.
Arkansas: The Business Conditions Index for Arkansas fell to a healthy 60.6 from 66.1 in December. Components from the January survey of supply managers were: new orders at 51.5, production or sales at 49.2, delivery lead time at 82.3, inventories at 70.5, and employment at 49.3. Since the beginning of the pandemic, Arkansas has gained 1,700 manufacturing jobs for an increase of 1.1%. During the same period of time, manufacturing hourly wages expanded by 2.0% (wage data are non-seasonally adjusted from U.S. Bureau of Labor Statistics).
Iowa: Iowa's Business Conditions Index for January sank to a solid 56.7 from 60.6 in December. Components of the overall January index were: new orders at 51.1, production, or sales, at 48.1, delivery lead time at 79.7, employment at 41.5, and inventories at 63.3. Since the beginning of the pandemic, Iowa has gained 500 manufacturing jobs for an increase of 0.2%. During the same period of time, manufacturing hourly wages expanded by 4.1% (wage data are non-seasonally adjusted from U.S. Bureau of Labor Statistics).
Kansas: The Kansas Business Conditions Index for January tumbled to 53.0 from 61.7 in December. Components of the leading economic indicator from the monthly survey of supply managers for January were: new orders at 50.5, production or sales at 46.5, delivery lead time at 75.9, employment at 38.8, and inventories at 53.3. Since the beginning of the pandemic, Kansas has lost 5,400 manufacturing jobs for a loss of 3.2%. During the same period of time, manufacturing hourly wages expanded by 7.0% (wage data are non-seasonally adjusted from U.S. Bureau of Labor Statistics).
Minnesota: The January Business Conditions Index for Minnesota slumped 61.3 from 70.2 in December. Components of the overall January index were: new orders at 51.7, production or sales at 48,1, delivery lead time at 83.7, inventories at 74.1, and employment at 49.1. Since the beginning of the pandemic, Minnesota has lost 3,200 manufacturing jobs for a loss of 1.0%. During the same period of time, manufacturing hourly wages expanded by 4.1%. (wage data are non-seasonally adjusted from U.S. Bureau of Labor Statistics).
Missouri: The January Business Conditions Index for Missouri declined to 59.9 from December's 65.3. Components of the overall index from the survey of supply managers for January were: new orders at 51.4, production or sales at 49.0, delivery lead time at 81.8, inventories at 68.9, and employment at 48.6. Since the beginning of the pandemic, Missouri has lost 2,500 manufacturing jobs for a loss of 0.9%. During the same period of time, manufacturing hourly wages expanded by 3.7%. (wage data are non-seasonally adjusted from U.S. Bureau of Labor Statistics).
Nebraska: Nebraska's overall index for January fell to 54.6 from 64.1 in December. Components of the index from the monthly survey of supply managers for January were: new orders at 50.7, production or sales at 46.9, delivery lead time at 76.9, inventories at 56.0, and employment at 42.7. Since the beginning of the pandemic, Nebraska has gained 1,000 manufacturing jobs for a gain of 1.0%. During the same period of time, manufacturing hourly wages expanded by 5.7%. (wage data are non-seasonally adjusted from U.S. Bureau of Labor Statistics).
North Dakota: The January Business Conditions Index for North Dakota dropped to an above growth neutral 54.9 from 59.4 in December. Components of the overall index for January were: new orders at 50.7, production or sales at 47.0, delivery lead time at 77.1, employment at 42.9, and inventories at 56.5. Since the beginning of the pandemic, North Dakota's manufacturing jobs have remained approximately unchanged. During the same period of time, manufacturing hourly wages expanded by 4.7%. (wage data are non-seasonally adjusted from U.S. Bureau of Labor Statistics).
Oklahoma: Oklahoma's Business Conditions Index expanded above growth neutral in January to 59.6 from 70.3 in December. Components of the overall January index were: new orders at 48.3, production or sales at 51.3, delivery lead time at 81.4, inventories at 68.0, and employment at 48.2. Since the beginning of the pandemic, Oklahoma has lost 8,200 manufacturing jobs for a loss of 5.9%. During the same period of time, manufacturing hourly wages expanded by 8.0% (tops in the region) (wage data are non-seasonally adjusted from U.S. Bureau of Labor Statistics).
South Dakota: The January Business Conditions Index for South Dakota plummeted to 45.3 from 60.5 in December. Components of the overall index from the January survey of supply managers in the state were: new orders at 41.9, production or sales at 49.0, delivery lead time at 65.3, inventories at 23.8, and employment at 45.6. Since the beginning of the pandemic, South Dakota has lost 200 manufacturing jobs for a loss of 0.5%. During the same period of time, manufacturing hourly wages expanded by 7.2%. (wage data are non-seasonally adjusted from U.S. Bureau of Labor Statistics).
Categories: Nebraska, Business, North Dakota, Business