October’s Mid-America Manufacturing Index Turns Positive Even as Job Losses Continue

October 2024 Survey Highlights:
*For the fifth time this year, the overall, or Business Conditions Index, rose above growth neutral.
Almost four of 10 supply managers named supply chain disruptions as the top challenge to their firm over the next year.
*The region’s employment index slumped below growth neutral for a 10th straight month.
Supply managers remained pessimistic regarding the economic outlook, with approximately 41% expecting a recession, or a sharp downturn in economic activity in the next six months.
*As a result of a cooling 2024 economy and waning inflationary pressures, Goss expects the Federal Reserve to cut interest rates by 0.25% at its November 6-7, 2024, meetings.
 
OMAHA, Neb. (November 1, 2024) — For the fifth time in 2024, the Creighton University
Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, climbed slightly above the 50.0 growth neutral threshold.

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, rose to 51.1 from 48.1 in September. The index represents the 10th time in 2024 that the index has drifted slightly above or below growth neutral.

“The overall index, much like the U.S. reading, has vacillated around growth neutral since December of 2023. Manufacturers in the region continue to shed jobs. In terms of impending economic threats, supply managers named supply chain disruptions as the top potential risk to their firm’s business operations in the months ahead,” 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.

The Mid-America report is produced independently of the national ISM.

When asked to identify the top economic challenges for their firm’s operations in the months ahead, 39.9% of supply managers named supply chain disruptions; 27.8% reported higher inflation; 11.1% identified labor shortages; 5.6% listed cyberattacks; and the remaining 15.6% named other issues.   

Employment: After climbing to growth neutral in December of last year, the employment gauge has tumbled below 50.0 for the past 10 months. The October employment index sank to 44.2 from September’s 44.3. Despite falling manufacturing employment, approximately 11.1% of supply managers named labor shortages as their firm’s top threat to business operations in the months ahead.  

U.S. Bureau of Labor Statistics data show that seasonally adjusted regional manufacturing employment fell by 3,700 jobs (-0.3%) thus far in 2024. During the same period of time, U.S. manufacturing employment sank by an identical (-0.3%), or by 43,000 jobs.  

Comments from supply managers in October:

“Though we are slow right now, we are taking advantage of this time to train our newer work force.”
“I just hope that if the right takes the White House, they put measures in place to keep this (current economic situation) from ever happening again. The enemy from within, indeed!”
“Labor inflation and the government programs to keep people from working are far and away the most crippling factors.”
“When we hit a recession cycle, the lack of grit in our people will be the next foundation to fail....DRAIN THE SWAMP!”

Wholesale Prices: The October price gauge slipped to 56.5 from 56.6 in September. “The regional inflation yardstick has clearly moved into a range indicating inflationary pressures moving toward the Federal Reserve’s target. As a result, I expect the Fed to cut interest rates by a more modest 25 basis points (0.25%) at its next meeting on November 6-7,” said Goss.

Confidence: Looking ahead six months, economic optimism, as captured by the October Business Confidence Index, rose sharply to a still weak 47.1 from 26.2 in October. “Approximately 41% of supply managers expect a recession, or worsening business conditions, over the next six months,” said Goss.

Inventories: The regional inventory index, reflecting levels of raw materials and supplies, dropped to 48.5 from 51.4 in September. “Since the potential for an East/Gulf Coast Longshoremen’s strike was pushed out until January 2025, supply managers reduced their inventory cushions in October,” said Goss. 

Trade: The relatively strong dollar continues to make U.S. goods less competitively priced abroad and pushed the export index down to 47.7 from 49.3 in September. A weak regional economy slowed purchases from abroad, although the import reading did increase to 49.1 from 43.1 in September.

According to the latest U.S. International Trade Administration data, the regional manufacturing sector expanded 2024 year-to-date exports by $2.2 billion from the same period in 2023 for a 3.4% gain.

Other survey components of the October Business Conditions Index were: new orders increased to 49.4 from 44.8 in September; the production or sales index improved to 54.1 from September’s 44.9; and the speed of deliveries of raw materials and supplies climbed to 59.5 from September’s 55.0. This upturn indicates supply chain disruptions and delivery bottlenecks rose 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 October Business Conditions Index declined to 51.3 from 53.8 in September. Components from the October survey of supply managers were: new orders at 47.6; production or sales at 55.1; delivery lead time at 61.6; inventories at 54.1; and employment at 38.0. According to the latest U.S. International Trade Administration data, Arkansas’ manufacturing sector expanded 2024 year-to-date exports by $481 million from the same period in 2023 for a 13.8% gain.

Iowa: The state’s Business Conditions Index for October improved to a weak 48.0 from 43.3 in September. Components of the overall October index were: new orders at 52.9; production or sales at 52.3; delivery lead time at 57.0; employment at 45.8; and inventories at 31.8. According to the latest U.S. International Trade Administration data, Iowa’s manufacturing sector experienced a drop in 2024 year-to-date exports of $954 million from the same period in 2023 for an 8.4% decline.

Kansas: The Kansas Business Conditions Index for October rose to 51.9 from 48.8 in September. Components of the leading economic indicators from the monthly survey of supply managers for October were: new orders at 47.2; production or sales at 54.0; delivery lead time at 59.8; employment at 46.9; and inventories at 51.6. According to the latest U.S. International Trade Administration data, Kansas’ manufacturing sector expanded 2024 year-to-date exports by $311 million from the same period in 2023 for a 3.8% gain.

Minnesota: The October Business Conditions Index for Minnesota increased to 47.2 from September’s 42.5. Components of the overall October index were: new orders at 46.7; production or sales at 54.8; delivery lead time at 56.9; inventories at 31.6; and employment at 45.8. According to the latest U.S. International Trade Administration data, Minnesota’s manufacturing sector expanded 2024 year-to-date exports by $2.1 billion from the same period in 2023 for a 13.8% gain.

Missouri: The state’s October Business Conditions Index increased to 50.7 from 45.7 in September. Components of the overall index from the survey of supply managers for October were: new orders at 46.8; production or sales at 52.6; delivery lead time at 57.8; inventories at 50.2; and employment at 46.0. According to the latest U.S. International Trade Administration data, Missouri’s manufacturing sector expanded 2024 year-to-date exports by $1.4 billion from the same period in 2023 for a 13.4% gain.

Nebraska: For the sixth time in the past seven months, Nebraska’s overall index rose above growth neutral. The state’s October Business Conditions Index expanded to 51.8 from 51.5 in September. Components of the index from the monthly survey of supply managers for October were: new orders at 47.2; production or sales at 54.0; delivery lead time at 59.8; inventories at 51.2; and employment at 46.9. According to the latest U.S. International Trade Administration data, Nebraska’s manufacturing sector expanded 2024 year-to-date exports by $172 million from the same period in 2023 for a 3.7% gain.

North Dakota: The state’s overall, or Business Conditions Index, advanced above growth neutral for a third consecutive month to 54.1 from 50.8 in September. Components of the overall index for October were: new orders at 55.3; production or sales at 55.0; delivery lead time at 61.5; employment at 47.5; and inventories at 51.1. According to the latest U.S. International Trade Administration data, North Dakota’s manufacturing sector experienced a drop in 2024 year-to-date exports of $1.9 billion from the same period in 2023 for a 43.5% decline.

Oklahoma: The state’s Business Conditions Index rose to 52.1 from September’s 45.7. Components of the overall October index were: new orders at 53.1; production or sales at 52.7; delivery lead time at 57.7; inventories at 50.9; and employment at 46.0. According to the latest U.S. International Trade Administration data, Oklahoma’s manufacturing sector expanded 2024 year-to-date exports by $795 million from the same period in 2023 for a 20.0% gain.

South Dakota: The October Business Conditions Index for South Dakota climbed to 50.4 from September’s 43.1. Components of the overall October index were: new orders at 46.6; production or sales at 52.1; delivery lead time at 56.6; inventories at 51.2; and employment at 45.6. According to the latest U.S. International Trade Administration data, South Dakota’s manufacturing sector expanded 2024 year-to-date exports by $185 million from the same period in 2023 for a decline of 12.1%.

Survey results for the month of November will be released on December 2, 2024, the first business day of the month.