Since declining to a record low in April of last year, the Creighton University Mid-America Business Conditions Index. A leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, has remained above growth neutral for 19 of 20 months.
Overall Index: The Business Conditions Index, which uses the identical methodology as the national ISM, ranges between 0 and 100, expanded to a strong 64.6 from November's healthy 60.2.
"Creighton's monthly survey results indicate the region is adding manufacturing activity at a positive pace, and that regional growth will remain solid. 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 one in six 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.
"Regarding the Omicron variant, approximately half expect this strain of Covid-19 to slow deliveries while roughly 42.3 anticipate little or no impact on supply deliveries," said Goss.
Employment: The regional employment index remained above growth neutral for December, but dropped to 59.3 from 61.1 in November.
"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 25,000 manufacturing jobs, or 1.8%," said Goss.
Other December comments from supply mangers were:
- "(I) am forecasting stagflation in 2022."
- Biden economic policies are everything we feared they would be."
Wholesale Prices: The wholesale inflation gauge for the month declined to 82.7 from December's 92.9. "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.
"According to the U.S. Bureau of Labor Statistics, commodity prices are up approximately 22.8% over the last 12 months with fuels expanding by 54.6%, farm products advancing by 17.5%, and metal products soaring by 48.0%.
Confidence: Looking ahead six months, economic optimism, as captured by the December Business Confidence Index climbed to a healthy 64.0 from November's 46.2.
Inventories: The regional inventory index, reflecting levels of raw materials and supplies, expanded to 61.6 from 52.0 in November.
Trade: Despite supply chain bottlenecks, regional export numbers were positive for the month. The new export orders index advanced to 60.1 from November's 56.7, while the regional import reading climbed to 61.2 from 50.1 in November.
Other survey components of the December Business Conditions Index were: new orders rose to 66.7 from 57.4 in November; the production or sales index increased slightly to 53.8 from 53.7 in November; and the index reading for the speed of deliveries of raw materials and supplies climbed to 81.5 from November's 76.8. A higher reading indicates an increase 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.
Iowa's Business Conditions Index for December rose to 60.6 from 59.4 in November. Components of the overall December index were: new orders at 66.9, production, or sales, at 53.1, delivery lead time at 74.2, employment at 57.6, and inventories at 51.2. Since the beginning of the pandemic, Iowa durable goods manufacturing experienced much stronger growth than nondurablegoods producers in the state. Average hourly wages have advanced by only 0.8% during this same period of time, all data non-seasonally adjusted.
Categories: Iowa, Business, Nebraska, Business