December 2023 Survey Highlights:

• The wholesale price gauge fell into a moderate inflationary range from November’s “too hot” reading.
• On average, supply managers expect prices for inputs that their firm purchases to rise by 5.9% in 2024, or well above wholesale inflation of 0.9% recorded by the U.S. Bureau of Labor Statistics (BLS) for the past 12 months ending in November 2023.  
• Approximately 46% of supply managers expect a recession in 2024.
• Exports of manufactured goods from the nine-state region expanded from $74.7 billion for the first 10 months of 2022 to $77.9 billion for the same period in 2023 for 4.3% growth (U.S. International Trade Administration).
• U.S. BLS data showed that for 2023, the region’s manufacturing hourly wage rates expanded by 3.4%.
  • Leading 2023 state manufacturing in wage gains were: Kansas, Missouri, Nebraska and South Dakota – all above inflation.
  • Lagging 2023 state manufacturing in wage gains were: Arkansas, Iowa, Minnesota, North Dakota and Oklahoma – all below inflation. 

OMAHA, Neb. (Jan. 2, 2024) — After falling below growth neutral in November, the Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, bounced above the 50.0 growth neutral threshold in December.

 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, climbed to 50.3 from 42.2 in November.

 “Even with the positive bounce in December’s reading, supply managers remained pessimistic regarding the 2024 economy with 46% expecting a 2024 recession in the first half of the year.  Less than one-fifth, or 19%, anticipate an economic expansion in the first half of 2024,” 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 from the national ISM.

 As stated by a December survey participant, “I see a large drop off coming in January that will be larger than the normal after holiday drop off.”

 “The rapid expansion in federal government spending and debt will limit the Federal Reserve’s ability to reduce interest rates in 2024. Even so, I do expect a rate cut in March, but no rate change at the Fed’s rate-cutting committee meetings, January 30-31,” said Goss.

 Employment: After two straight months of below growth neutral employment readings, the hiring gauge expanded to 50.0 from 42.5 in November. “Over the past 12 months, according to U.S. Bureau of Statistics data, the region’s manufacturing sector shed employment by 4,400 jobs, or -0.3%, with the average hourly wage rate expanding by +3.4% for the period, or above the 3.1% increase in consumer prices,” said Goss.

 Other comments from supply managers in December:

• “Baseless spending with no rule of law – print money.”
• “We need more workers in the U.S.”
• “Too many complex cross currents in the economy to feel confident in predicting 2024.”
• “Politics has created our problems and it will take legitimate voters to correct it. Too many lies, deceptions and misleading narratives, confusing voters who are not seeing through the smoke and mirrors. It's time to pull back the curtain on the man behind it!”

 Wholesale Prices: The wholesale inflation gauge for the month plummeted to 57.7 from November’s “too hot” 71.1.  “On average, supply managers expect prices for inputs that their firm purchases to rise by 5.9% in 2024. This is well above wholesale price inflation recently recorded by the U.S. Bureau of Labor Statistics of 0.9% for the 12 months ending in November 2023,” said Goss.  

 As stated by one supply manager, “We are forecasting a price change of 4-6%.”

 Confidence: Looking ahead six months, economic optimism as captured by the December Business Confidence Index slipped to a very weak 35.2 from November’s 35.8. “Only 19% of supply managers expect expanding business conditions over the next six months,” said Goss.

 Inventories: The regional inventory index, reflecting levels of raw materials and supplies, increased to 46.0 from November’s 42.6. “Manufacturing firms had been expanding inventory levels for much of 2023, but recent slower growth and downturns for November and December point to concerns among manufacturers regarding the sales outlook,” said Goss.

 Trade: Trade numbers were weak for the month with new export orders sinking to 47.0 from November’s solid 54.6. November imports dropped to 36.9 from 46.7 in November. According to the U.S. International Trade Administration, the export of manufactured goods from the nine- state region expanded from $74.7 billion for the first 10 months of 2022 to $77.9 billion for the same period in 2023 for 4.3% growth.

 Other survey components of the December Business Conditions Index were: new orders increased slightly to 40.7 from 40.5 in November; the production or sales index improved to 60.0 from 35.7 in November; and the speed of deliveries of raw materials and supplies climbed to 64.8 from November’s 50.0. 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 December Business Conditions Index increased to 47.0 from 37.1 in November. Components from the December survey of supply managers were: new orders at 39.4; production or sales at 49.0; delivery lead time at 59.2; inventories at 45.3; and employment at 42.3. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector shed 2,300 jobs, or -1.4%, with the average hourly wage rate expanding by +0.9% for the 12 months, and well below the 3.1% increase in consumer prices.

 Iowa: The state’s Business Conditions Index for December rose to 49.7 from November’s 44.6. Components of the overall December index were: new orders at 49.6; production or sales at 40.0; delivery lead time at 63.5; employment at 46.6; and inventories at 48.9. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector boosted employment by 2,500 jobs, or +1.1%, with the average hourly wage rate decreasing by -0.2% for the period, or well below the 3.1% increase in consumer prices.

 Kansas: The Kansas Business Conditions Index for December climbed to 54.1 from November’s 44.7. Components of the leading economic indicator from the monthly survey of supply managers for December were: new orders at 40.8; production or sales at 50.4; delivery lead time at 69.5; employment at 52.6; and inventories at 57.1. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector shed 600 jobs, or -0.9%, with the average hourly wage rate expanding by +4.4% for the period, or above the 3.1% increase in consumer prices.

 Minnesota: The December Business Conditions Index for Minnesota strengthened to 55.7 from 43.9 in November. Components of the overall December index were: new orders at 41.0; production or sales at 50.6; delivery lead time at 70.8; inventories at 62.2; and employment at 54.0. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector shed 3,900 jobs, or -1.2%, with the average hourly wage rate expanding by +0.5% for the period, or well below the 3.1% increase in consumer prices.

 Missouri: The state’s December Business Conditions Index increased to a weak 46.1 from 37.5 in November. Components of the overall index from the survey of supply managers for December were: new orders at 39.9; production or sales at 49.5; delivery lead time at 62.9; inventories at 32.3; and employment at 46.0. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector boosted employment by 3,400, or +1.2%, with the average hourly wage rate expanding by +8.6% for the period, or well above the 3.1% increase in consumer prices.

 Nebraska: For a third straight month, Nebraska’s Business Conditions Index sank below growth neutral, but climbed to 49.4 from 39.3 in November. Components of the index from the monthly survey of supply managers for December were: new orders at 40.3; production or sales at 49.9; delivery lead time at 65.6; inventories at 42.6; and employment at 48.8. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector boosted employment by 2,100, or +2.9%, with the average hourly wage rate expanding by +6.7% for the period, or more than twice the 3.1% increase in consumer prices.

 North Dakota: After falling below growth neutral for November, the state’s December Business Conditions Index climbed to 54.7 from November’s 47.2. Components of the overall index for December were: new orders at 40.9; production or sales at 50.4; delivery lead time at 70.0; employment at 53.1 and inventories at 58.9. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector’s employment increased by 200 jobs, or +0.5%, with the average hourly wage rate expanding by +0.4% for the period, or well below the 3.1% increase in consumer prices.

 Oklahoma: After sinking below growth neutral for November, Oklahoma’s Business Conditions Index rose to 50.5 from 43.2 in November. Components of the overall December index were: new orders at 40.4; production or sales at 50.0; delivery lead time at 66.5; inventories at 46.0; and employment at 49.7. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector boosted employment by 300, or +0.2%, with the average hourly wage rate expanding by +3.0% for the period, or slightly below the 3.1% increase in consumer prices.

 South Dakota: The December Business Conditions Index for South Dakota bounced to a regional high 57.2 from November’s 48.5, also a regional high. Components of the overall index were: new orders at 42.1; production or sales at 51.7; delivery lead time at 79.0; inventories at 51.2; and employment at 62.2. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector boosted employment by 500, or +1.1%, with the average hourly wage rate expanding by +9.2% for the period, or almost three times the 3.1% increase in consumer prices.

 Survey results for the month of January will be released on February 1, 2024, the first business day of the month.