November 2023 Survey Highlights:

• Overall index drops to its lowest level since June 2020, or the early days of the pandemic.
• Overall index is in a range indicating recessionary conditions in the regional manufacturing sector.
• U.S. Bureau of Labor Statistics (BLS) data show that the region has lost 12,000 manufacturing jobs since April of this year.
• Survey results indicate jobs losses for the month combined with a significant upturn in inflationary pressures.
• Approximately six of 10 supply managers named the looming recession as the top threat to their firm’s business activity.
• According to BLS data, the regional average manufacturing wage rate climbed by 3.4% over the past 12 months or slightly above the 3.2% increase in consumer prices.
• As reported by one supply manager, “Rising prices and labor costs continue to plague our business even though we continue to do more with less.”

 OMAHA, Neb. (Dec. 1, 2023) — After two straight months of readings above growth neutral, the Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, slumped significantly below the 50.0 growth neutral threshold in November.

 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, plummeted to 42.2 from 51.5 in October.

 “This month’s overall reading is the lowest recorded since the early days of the pandemic in June 2020. Normally, several consecutive readings below 43.0 point to a recession ahead for the regional manufacturing sector. I expect the national ISM reading, which comes out later this morning, to likewise fall to recessionary levels,” 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.

 Manufacturing supply managers in Creighton’s November survey named the greatest economic threats for their firm’s business activity in the next six months. Approximately six of 10 indicated a recession; labor shortages were identified by two of 10; inflation was named by one of 10; and higher interest rates were reported by one of 10 as the top economic threat.

 Said one supply manager, “While we have work, we are seeing many companies struggling for work.”

 “The rapid expansion in federal government spending and debt will push the Federal Reserve to keep its foot on the economic brakes via holding short-term interest rates at its current level. I expect the Fed to make no changes in short term rates until the end of January when the Fed meets for the first time in 2024,” said Goss.

 Employment: The regional hiring gauge sank below growth neutral for a second straight month to 42.5 from 47.5 in October. “According to U.S. Bureau of Labor Statistics data, the regional average manufacturing wage rate climbed by 3.4% over the past 12 months, or slightly above the 3.2% growth in consumer prices,” said Goss.    

 “Despite job losses for October and November, Creighton’s monthly survey indicated continued labor hoarding by some manufacturers. Even so, government data show that the region has lost 12,000 manufacturing jobs since April of this year,” said Goss.

 Other comments from supply managers in November:

• “Global economic conditions have hurt profits in key regions, bringing overall growth forecasts for 2024 down.”
• “Regardless of who is in charge in Washington D.C., at some point we will have to pay for the wasteful spending. We are far from out of the woods yet!”
• “Our Fractional Leadership (CFOs, Controllers and HR) is BOOMING.”
• “Inflation continues to hinder growth and is the hidden tax the government imposes. Also, if we are letting people in by illegal means, at least let them work.”
• “There is a serious gap between the baby boomer generation and the way economies worked for them and the latest generation who expect technology to solve all their problems. The tribal knowledge baby boomers are retiring with will create gaps - people still need to think critically, even with better technology.”

 Wholesale Prices: The wholesale inflation gauge for the month soared to 71.1 from 55.0 in October. “The month’s reading raises the risk of stagflation - an economic downturn and excessive inflation. However, this is just one month’s reading. It will take several more readings like this to get overly concerned about stagflation,” said Goss.  

 Confidence: Looking ahead six months, economic optimism, as captured by the November Business Confidence Index, increased to a weak 35.8 from October’s anemic 25.0. “Only 14% 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, sank to 42.6 from October’s 50.1. Manufacturing firms had been expanding inventory levels for much of 2023, but recent slower growth and a downturn for November point to concerns among manufacturers regarding the sales outlook,” said Goss.

 Trade: Trade numbers were surprisingly stronger for the month with new export orders increasing to a solid 54.6 from October’s 41.7. November imports dropped to 46.7 from 50.2 in October.   

 Other survey components of the November Business Conditions Index were: new orders sank to 40.5 from 50.0 in October; the production or sales index slumped to 35.7 from 49.8 in October; and the speed of deliveries of raw materials and supplies declined to 50.0 from October’s 60.0. The decrease indicates a reduction 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 November Business Conditions Index declined to 37.1 from 51.8 in October. Components from the November survey of supply managers were: new orders at 39.8; production or sales at 34.7; delivery lead time at 48.1; inventories at 34.9; and employment at 28.0. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector shed 2,400 jobs, or -1.7%, with average hourly wage rates remaining flat for the last 12 months.

 Iowa: The state’s Business Conditions Index for November dropped to a weak 44.6 from October’s 49.0. Components of the overall November index were: new orders at 46.6; production or sales at 34.1; delivery lead time at 44.6; employment at 48.7; 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 2,600 jobs, or +1.2%, with the average hourly wage rate expanding by 1.5% for the period, or well below the 3.2% increase in consumer prices.

 Kansas: The Kansas Business Conditions Index for November fell to 44.7 from 51.5 in October. Components of the leading economic indicator from the monthly survey of supply managers for November were: new orders at 40.3; production or sales at 35.2; delivery lead time at 51.0; employment at 47.7; and inventories at 49.4. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector shed 1,800 jobs, or -1.0%, with the average hourly wage rate expanding by 4.6% for the period, or above the 3.2% increase in consumer prices.

 Minnesota: The November Business Conditions Index for Minnesota weakened to 43.9 from 49.0 in October. Components of the overall November index were: new orders at 39.1; production or sales at 35.2; delivery lead time at 50.8; inventories at 48.3; and employment at 46.3. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector shed 3,700 jobs, or -1.1%, with the average hourly wage rate expanding by 0.2% for the period, or well below the 3.2% increase in consumer prices.

 Missouri: Missouri’s November Business Conditions Index slumped to 37.5 from 43.9 in October. Components of the overall index from the survey of supply managers for November were: new orders at 39.5; production or sales at 34.4; delivery lead time at 46.2; inventories at 24.6; and employment at 42.1. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector boosted employment by 1,700, or +0.6%, with the average hourly wage rate expanding by 7.9% for the period, or well above the 3.2% increase in consumer prices.

 Nebraska: For a second straight month, Nebraska’s Business Conditions Index sank below growth neutral to 39.3 from 48.8 in October. Components of the index from the monthly survey of supply managers for November were: new orders at 38.7; production or sales at 34.6; delivery lead time at 47.7; inventories at 33.1; and employment at 41.3. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector boosted employment by 2,000, or +1.9%, with the average hourly wage rate expanding by 6.3% for the period, or well above the 3.2% increase in consumer prices.

 North Dakota: After three straight months of healthy readings, the state’s Business Conditions Index sank to a weak 47.2 from October’s 55.0. Components of the overall index for November were: new orders at 40.5; production or sales at 35.4; delivery lead time at 52.0; employment at 53.9 and inventories at 54.0. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector’s employment was flat (0.0%) with the average hourly wage rate expanding by 1.7% for the period, or well below the 3.2% increase in consumer prices.

 Oklahoma: After two consecutive months of above growth neutral readings, Oklahoma’s Business Conditions Index sank below the growth neutral threshold. The November index slumped to 43.2 from October’s 53.0. Components of the overall November index were: new orders at 40.2; production or sales at 35.1; delivery lead time at 50.4; inventories at 45.5; and employment at 43.8. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector boosted employment by 1,100, or +0.8%, with the average hourly wage rate expanding by 2.7% for the period, or below the 3.2% increase in consumer prices.

 South Dakota: The November Business Conditions Index for South Dakota plummeted to 48.5 from 59.0 in October, a regional high. Components of the overall index were: new orders at 41.4; production or sales at 36.3; delivery lead time at 57.1; inventories at 51.2; and employment at 56.7. Over the past 12 months, according to U.S. Bureau of Statistics data, the state’s manufacturing sector boosted employment by 600, or +1.3%, with the average hourly wage rate expanding by 9.7% for the period, or approximately three times the 3.2% increase in consumer prices.

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