OMAHA, Neb. (July 3, 2023) — For a fifth straight month, the Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, expanded above growth neutral.
Overall Index: The Business Conditions Index, which uses the identical methodology as the national Institute for Supply Management (ISM) and ranges between 0 and 100 with 50.0 representing growth neutral, dropped to 50.8 for June from 51.3 in May.
The Mid-America report is produced independently from the national ISM.
“After flashing recession warning signals between November 2022 and January 2023, Creighton’s monthly survey of manufacturing supply managers over the past several months is now pointing to positive but slow growth with significantly lower inflationary pressures at the wholesale level,” said Ernie Goss, PhD, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.
“While it’s too early to tell if the Federal Reserve is achieving its ‘soft landing,’ results from Creighton’s surveys over the last several months are somewhat promising on the inflation front, but with waning economic growth. Even so, I expect the Federal Reserve’s interest rate setting committee, the FOMC, to raise short-term interest rates at its July 25-26 meetings,” said Goss.
Other comments from supply managers in June:
- “Business has slowed down some. Prices have been stable for the most part. Some downward movement for some plastics and corrugated.”
- “Inflation and social policies are crippling (have been for two years).”
- “There are a lot of cross currents.”
- “Under the current administration there is little hope for economic leveling as we shift from one extreme to another.”
- “I feel that the recession is going to get worse. I am seeing less freight moving and less heavy machinery is being moved.”
“Employment growth and levels remain solid due to manufacturers’ labor hoarding. That is, manufacturers in the region are maintaining employment levels due to a fear of an inability to hire back once business activity levels pick up,” said Goss.
Wholesale Prices: The wholesale inflation gauge for the month declined to 67.4 from May’s 74.0. On average, supply managers expect wholesale prices for the products and services their firm purchases to climb by 0.7% over the next six months.
According to one supply manager, “Prices have been stable for the most part. Some downward movement for some plastics and corrugated.”
Confidence: Looking ahead six months, economic optimism as captured by the June Business Confidence Index increased to a very weak 32.6 from 29.6 in May. “Approximately 48% of supply managers expect economic growth to decline in the next six months,” said Goss.
Inventories: The regional inventory index, reflecting levels of raw materials and supplies, dropped to 52.2 from May’s 59.1. “Manufacturing firms have been expanding inventory levels beginning in February of this year. This will support moderate sales growth in the months ahead,” said Goss.
Trade: Trade numbers were once again weak for the month with new export orders slumping to 42.3 from May’s 46.2. On the other hand, imports climbed to 58.3 from 52.8 in May.
Despite the recent downturn in exports, U.S. International Trade Association data indicate that the region expanded exports for the first four months of 2023. Exports expanded to $35.3 billion from $33.5 billion in 2022 for the same time-period, indicating growth of 5.2%.
Other survey components of the June Business Conditions Index were: new orders fell to 47.7 from 52.4 in May; the production or sales index sank to 50.0 from 52.1 in May; and the speed of deliveries of raw materials and supplies climbed to 54.3 from May’s 41.0. The increase indicates an upturn in supply chain disruptions and delivery bottlenecks for the month.
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.
Below are the state reports:
Arkansas: The state’s June Business Conditions Index expanded to 53.9 from 50.4 in May. Components from the June survey of supply managers were: new orders at 48.1; production or sales at 50.3; delivery lead time at 56.7; inventories at 57.2; and employment at 57.1. According to U.S. International Trade Association data, Arkansas expanded exports by 16.2% for the first four months of 2023 compared to the same time-period in 2022. Transportation equipment export growth of 36.0% led the way.
Iowa: The state’s Business Conditions Index for June climbed to 55.4 from May’s 51.9. Components of the overall June index were: new orders at 51.6; production or sales at 50.7; delivery lead time at 57.0; employment at 59.1; and inventories at 58.8. According to U.S. International Trade Association data, Iowa expanded exports by 10.6% for the first four months of 2023 compared to the same time-period in 2022. Machinery equipment export growth of 41.6% led the way.
Kansas: The Kansas Business Conditions Index for June increased to a weak 48.6 from May’s 43.1. Components of the leading economic indicator from the monthly survey of supply managers for June were: new orders at 46.7; production or sales at 45.9; delivery lead time at 49.7; employment at 51.2; and inventories at 49.3. According to U.S. International Trade Association data, Kansas expanded exports by 2.4% for the first four months of 2023 compared to the same time-period in 2022. Transportation equipment export growth of 30.4% led the way.
Minnesota: The June Business Conditions Index for Minnesota sank to 50.2 from 51.1 in May. Components of the overall June index were: new orders at 47.8; production or sales at 49.5; delivery lead time at 55.3; inventories at 59.2; and employment at 48.3. According to U.S. International Trade Association data, Minnesota expanded exports by 3.0% for the first four months of 2023 compared to the same time-period in 2022. Computer and electronic equipment led the way with export growth of 6.4%.
Missouri: The state’s June Business Conditions Index rose to 53.1 from May’s 51.2. Components of the overall index from the survey of supply managers for June were: new orders at 48.0; production or sales at 50.2; delivery lead time at 56.4; inventories at 55.7; and employment at 55.3. According to U.S. International Trade Association data, Missouri expanded exports by 6.4% for the first four months of 2023 compared to the same time-period in 2022. Transportation equipment led the way with export growth of 20.9%.
Nebraska: After five straight months of above growth neutral readings, Nebraska’s Business Conditions Index slumped below the growth neutral threshold. The overall reading for June declined to 46.1 from 51.0 in May. Components of the index from the monthly survey of supply managers for June were: new orders at 47.4; production or sales at 48.3; delivery lead time at 53.4; inventories at 41.3; and employment at 40.2. According to U.S. International Trade Association data, Nebraska contracted exports by 5.3% for the first four months of 2023 compared to the same time-period in 2022. Processed food accounted for the largest portion of the decline with a downturn of 11.3%.
North Dakota: The state’s Business Conditions Index sank below growth neutral for June with a reading of 45.0, which was down from 56.0 in May. Components of the overall index for June were: new orders at 47.2; production or sales at 47.5; delivery lead time at 52.3; employment at 42.3; and inventories at 35.7. According to U.S. International Trade Association data, North Dakota expanded exports by 20.6% for the first four months of 2023 compared to the same time-period in 2022. Petroleum products led the way with export growth of 43.8%.
Oklahoma: Oklahoma’s Business Conditions Index slumped in June to a reading below growth neutral. The June index increased to 45.5 from 44.7 in May. Components of the overall June index were: new orders at 47.2; production or sales at 47.7; delivery lead time at 52.5; inventories at 36.9; and employment at 43.2. According to U.S. International Trade Association data, Oklahoma contracted exports by 10.3% for the first four months of 2023 compared to the same time-period in 2022. Machinery equipment accounted for the largest portion of the decline with a downturn of 11.1%.
South Dakota: The June Business Conditions Index for South Dakota declined to 52.8 from May’s solid 56.9. Components of the overall index from the June survey of supply managers in the state were: new orders at 48.0; production or sales at 50.2; delivery lead time at 56.3; inventories at 55.0; and employment at 54.4. According to U.S. International Trade Association data, South Dakota expanded exports by 15.3% for the first four months of 2023 compared to the same time-period in 2022. Processed food growth led the way with export growth of 5.9%.