March 2023 Survey Highlights:

• For a second straight month, the region’s overall index climbed above growth neutral.

• The regional wholesale inflation gauge continues to indicate significant inflationary pressures.

• On average, supply managers expect a 3.4% wage gain for 2023, or well below the rate of inflation.

• In terms of the greatest 2023 economic challenges, four of ten supply managers named supply chain disruptions and delays, and three of ten identified labor shortages as top threats.

OMAHA, Neb. (April 3, 2023) — After falling below growth neutral for three straight months, the Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, has now expanded for two consecutive months.

Overall Index: TheBusiness 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, sank to 50.8 from 56.1 in February.

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

“After flashing recession warning signals for three consecutive months, Creighton’s monthly survey of manufacturing supply managers indicates slow growth with continuing upward inflation 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 this is an end to the downward trend, it was somewhat promising on the growth front. However, the inflation reading serves as a negative signal for financial markets, and the Federal Reserve’s interest rate outlook,” said Goss.

Supply managers were asked to identify the top economic challenges in the months ahead:

• Four of ten named supply chain disruptions and delays.

• Three of ten identified labor shortages.

• Two of ten reported higher interest rates.

• The remaining one of ten named higher inflation. 

Employment: After dropping below growth neutral for three of the last four months, the regional hiring gauge slipped to 50.0 from 52.8 in February.

As stated by one supply manager, “Labor is slightly better; quality of candidates is still lacking, and their enthusiasm is also lacking.”

On average, supply managers expect a 3.4% wage gain for 2023, or well below the rate of inflation.

Other March Comments from Supply Managers:

• “With higher costs can mean fewer products to move. In the trucking industry that is bad news for all of us.”

• “Inflation is a tax that is not getting any better.”

• “We increase wages biannually to keep up with the cost of living.”

Wholesale Prices: The wholesale inflation gauge for the month declined to a still inflationary 77.1 from February’s 80.6.

“Much like the recent rapid expansion in wholesale price inflation at the national level, Creighton’s survey is pointing to greater input price pressures at the producer level, or what is often referred to as the wholesale price index,” said Goss.

“As a result of recent elevation in inflationary pressures at the wholesale level, I expect the Federal Reserve’s rate setting committee (FOMC) to announce a rate hike of 25 basis points (0.25%) at its next meetings, May 2-3, to combat elevated inflation,” said Goss.

Confidence: Looking ahead six months, economic optimism as captured by the March Business Confidence Index slumped to a very weak 34.8 from 38.1 in February. “Approximately 43.5% 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, was unchanged at February’s 58.4. “Manufacturing firms have begun returning inventory to normal levels. This will likely support sales growth in the months ahead,” said Goss.

Trade: Trade numbers were weak for March with export orders increasing to 45.9 from 35.0 in February. Additionally, firms continued to report weak imports due to an anemic regional economy. The March import reading slumped to 39.5 from 42.3 in February.

Other survey components of the March Business Conditions Index were: new orders climbed to 56.2 from 55.5 in February; the production, or sales index, sank to 52.1 from 58.3 in February; and the speed of deliveries of raw materials and supplies dropped to 37.5 from February’s 55.6. The decline indicates fewer 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.

Arkansas: The state’s March Business Conditions Index dropped to 48.8 from 52.6 in February. Components from the March survey of supply managers were: new orders at 47.0, production or sales at 55.0, delivery lead time at 33.7, inventories at 55.8 and employment at 52.3. According to U.S. government data, Arkansas’s top three exported manufactured goods for 2022 were:
1) Transportation equipment at $1.3 billion
2) Processed food at $871.4 million
3) Chemicals at $730.5 million

Iowa: The state’s Business Conditions Index for March fell to 49.4 from February’s 53.2. Components of the overall March index were: new orders at 56.6, production or sales at 51.7, delivery lead time at 35.1, employment at 48.3 and inventories at 55.3. According to U.S. government data, Iowa’s top three exported manufactured goods for 2022 were:
1) Machinery at $4.0 billion
2) Processed food at $3.9 billion
3) Chemicals at $3.0 billion

Kansas: The Kansas Business Conditions Index for March declined to 54.6 from February’s regional high of 65.8. Components of the leading economic indicator from the monthly survey of supply managers for March were: new orders at 61.2, production or sales at 53.5, delivery lead time at 36.9, employment at 52.3 and inventories at 69.1. According to U.S. government data, Kansas’s top three exported manufactured goods for 2022 were:
1) Processed foods at $3.2 billion
2) Transportation equipment at $2.9 billion
3) Machinery at $1.3 billion

Minnesota: The March Business Conditions Index for Minnesota slumped to 46.0 from 59.6 in February. Components of the overall March index were: new orders at 56.3, production or sales at 50.8, delivery lead time at 34.2, inventories at 48.4 and employment at 40.0. According to U.S. government data, Minnesota’s top three exported manufactured goods for 2022 were:
1) Computer and electronic products at $4.2 billion
2) Machinery at $3.9 billion
3) Petroleum at $2.8 billion

Missouri: The state’s March Business Conditions Index dropped to 48.0 from February’s 52.7. Components of the overall index from the survey of supply managers for March were: new orders at 56.0, production or sales at 50.0, delivery lead time at 33.4, inventories at 42.1 and employment at 58.7. According to U.S. government data, Missouri’s top three exported manufactured goods for 2022 were:
1) Chemicals at $3.7 billion
2) Transportation equipment at $3.1 billion
3) Processed food at $1.5 billion

Nebraska: After four consecutive months of below growth neutral readings, Nebraska’s Business Conditions Index has now climbed above the growth neutral threshold for the third straight month. The overall reading for March fell to 52.5 from 56.7 in February. Components of the index from the monthly survey of supply managers for March were: new orders at 57.0, production or sales at 52.7, delivery lead time at 36.2, inventories at 63.3 and employment at 53.4. According to U.S. government data, Nebraska’s top three exported manufactured goods for 2022 were:
1) Processed foods at $3.3 billion
2) Machinery at $1.1 billion
3) Chemicals at $780.4 million

North Dakota: The state’s March Business Conditions Index dipped below growth neutral with a reading of 44.8 from 53.3 in February. Components of the overall index for March were: new orders at 56.2, production or sales at 50.5, delivery lead time at 33.9, employment at 37.3 and inventories at 46.2. According to U.S. government data, North Dakota’s top three exported manufactured goods for 2022 were:
1) Petroleum $1.4 billion
2) Machinery at $887.7 million
3) Chemicals at $624.1 million

Oklahoma: Oklahoma’sBusiness Conditions Index advanced in March to a reading above growth neutral. The March index rose to 55.3 from 54.9 in February. Components of the overall March index were: new orders at 56.8, production or sales at 52.3, delivery lead time at 53.3, inventories at 60.1 and employment at 54.1. According to U.S. government data, Oklahoma’s top three exported manufactured goods for 2022 were:
1) Machinery at $1.2 billion
2) Chemicals at $1.1 billion
3) Transportation equipment at $1.1 billion

South Dakota: The March Business Conditions Index for South Dakota declined to a weak 47.8 from February’s 49.7. Components of the overall index from the March survey of supply managers in the state were: new orders at 56.5, production or sales at 51.3, delivery lead time at 34.7, inventories at 52.1 and employment at 44.4. According to U.S. government data, South Dakota’s top three exported manufactured goods for 2022 were:
1) Processed foods at $809.3 million
2) Chemicals at $468.6 million
3) Machinery at $226.6 million

Survey results for April will be released on May 1, 2023, the first business day of the month.

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