From Creighton Uni's Heider College of Business, November 1:
Mid-America Growth Climbs as Confidence Plunges: Inventory Stockpiling Significant Contributor to Supply Disruptions
October survey highlights:
- Creighton’s regional Business Conditions Index climbed into a range indicating healthy manufacturing growth, and pointing to overall healthy growth.
- Over the past 12 months regional manufacturing employment expanded by a strong 3.3% with a gain in average hourly wages of 3.9%.
- Approximately one-third of supply managers reported that hoarding, or stockpiling of inventories has contributed significantly to supply chain bottlenecks.
- Business confidence remained at its lowest level since the first month of COVID-19, March 2020.
OMAHA, Neb. (Nov. 1, 2021) – 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 17 of the last 18 months.
Overall index: The Business Conditions Index, which uses the identical methodology as the national ISM, ranges between 0 and 100, climbed to a very healthy 65.2 from September’s 61.6.
“Creighton’s monthly survey results indicate the region is adding manufacturing business activity at a positive pace, and that regional growth will remain solid, but somewhat slower. Almost one-third of supply managers reported that inventory stockpiling has contributed significantly to supply chain bottlenecks,” 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.
Approximately 28% indicated that bottlenecks at U.S. ports were the second most important factor accounting for supply chain disruptions. One supply manager indicated that, “The feds need to stop with the political games and allow the flow of imports in the U.S. immediately.”
Firms continue to report difficulties in finding and hiring new workers. Approximately 27% of supply managers said finding and hiring qualified workers was the third most important factor accounting for supply chain bottlenecks and disruptions.
Employment: The regional employment index remained significantly above growth neutral for October expanding from 56.7 in September to 66.1 in October.
“Even with strong manufacturing job growth, the region has yet to recover all job losses from the pandemic. The latest U.S. Bureau of Labor Statistics data indicate that compared to pre-COVID-19 levels, current nonfarm employment is down by 435,000 jobs, or 3.0%, for the region, and almost 5.0 million, or 3.3%, for the U.S.,” said Goss.
“Over the past 12 months, according to U.S. Bureau of Labor Statistics, regional manufacturing employment expanded by a strong 3.3% with a gain in average hourly wages of 3.9%,” said Goss.
Other October comments from supply mangers were:
“There is no good reason why we have a backlog of ships waiting to off load on the west coast.”
“All (supply chain) delays point to federal government (failures).”
Wholesale Prices: The wholesale inflation gauge for the month climbed to a very brisk 96.5 from October’s 94.9. “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 20.5% over the last 12 months with fuels, farm products and metal products soaring by 44.3%, 24.4%, and 42.5%, respectively.....
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