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Mid-American Economy

Mid-America Economy Ends on Healthy Note: One-Third Expect Bottlenecks to Worsen in 2022 

December survey highlights:

  • Creighton’s regional Business Conditions Index climbed into a range indicating very healthy manufacturing growth. 
  • Supply chain delays worsened in December.
  • Approximately one-third of supply managers expect supply chain disruptions to get worse for the first six months of 2022.
  • Economic confidence soars off weakness in November.
  • Approximately half of supply managers expect the Omicron strain of Covid-19 to slow deliveries. 

OMAHA, Neb. (Jan. 3, 2022) – 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: 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.

Arkansas: The Business Conditions Index for Arkansas expanded to 66.1 from 54.6 in November. Components from the December survey of supply managers were: new orders at 66.8, production or sales at 52.9, delivery lead time at 81.6, inventories at 72.3, and employment at 57.0. Since the beginning of the pandemic, Arkansas durable goods manufacturing experienced much stronger growth than nondurablegoods producers in the state. Average hourly wages have advanced by 3.5% during this same period of time, all data non-seasonally adjusted from U.S. Bureau of Labor Statistics. 

Iowa: 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.

Kansas: The Kansas Business Conditions Index for December climbed to 61.7 from 61.2 in November. Components of the leading economic indicator from the monthly survey of supply managers for December were: new orders at 66.8, production or sales at 52.9, delivery lead time at 81.6, employment at 57.0, and inventories at 50.0. Since the beginning of the pandemic, Kansas durable goods manufacturing experienced much stronger growth than nondurablegoods producers in the state. Average hourly wages have advanced by 4.4% during this same period of time all data non-seasonally adjusted.

Minnesota: The December Business Conditions Index for Minnesota advanced to 70.2 from November’s 65.1. Components of the overall December index were: new orders at 68.3, production or sales at 56.3, delivery lead time at 89.5, inventories at 70.5, and employment at 66.3. Since the beginning of the pandemic, Kansas nondurablegoods manufacturing experienced much stronger growth than durable goods producers in the state. Average hourly wages have advanced by 6.4% during this same period of time all data non-seasonally adjusted.

Missouri: The December Business Conditions Index for Missouri dipped to 65.3 from 66.3 in November. Components of the overall index from the survey of supply managers for December were: new orders at 60.3, production or sales at 54.9, delivery lead time at 86.3, inventories at 62.2, and employment at 62.5. Since the beginning of the pandemic, Missouri has yet to regain jobs lost in durable goods manufacturing and nondurablegoods production. Average hourly wages have advanced by 6.1% during this same period of time all data non-seasonally adjusted.

Nebraska: Nebraska’s overall index for December fell to 64.1 from 67.0 in November. Components of the index from the monthly survey of supply managers for December were: new orders at 53.9, production or sales at 67.7, delivery lead time at 83.8, inventories at 55.8, and employment at 59.6. Since the beginning of the pandemic, Nebraska durable goods and nondurablegoods manufacturers have experienced slow growth with total manufacturing jobs above pre-pandemic levels. Average hourly wages have advanced by 10.2% during this same period of time, all data non-seasonally adjusted.

North Dakota: The December Business Conditions Index for North Dakota bounced above growth neutral to 59.4 from November’s regional low of 49.6. Components of the overall index for December were: new orders at 66.5, production or sales at 52.0, delivery lead time at 79.5, employment at 54.6, and inventories at 44.6. Since the beginning of the pandemic, North Dakota nondurablegoods manufacturing experienced much stronger growth than durable goods producers in the state. Average hourly wages have advanced by 8.7% during this same period of time, all data non-seasonally adjusted.

Oklahoma: Oklahoma’s Business Conditions Index expanded above growth neutral in December to a regional high of 70.3 from 62.4 in November. Components of the overall December index were: new orders at 68.3, production or sales at 56.3, delivery lead time at 89.5, inventories at 70.4, and employment at 66.3. Since the beginning of the pandemic, Oklahoma nondurablegoods manufacturing experienced much stronger growth than durable goods producers in the state. Average hourly wages have advanced by 9.8% during this same period of time, all data non-seasonally adjusted.

South Dakota: The December Business Conditions Index for South Dakota climbed to 60.5 from 55.0 in November. Components of the overall index from the December survey of supply managers in the state were: new orders at 65.4, production or sales at 49.5, delivery lead time at 73.8, inventories at 65.7, and employment at 47.9. Since the beginning of the pandemic, South Dakota nondurablegoods manufacturing experienced much stronger growth than nondurablegoods producers in the state. Average hourly wages have advanced by 7.7% during this same period of time, all data non-seasonally adjusted.

Survey results for January will be released on Feb. 1, 2022, the first business day of the month.