From Creighton's Heider College of Business, December 1:
November survey highlights:
- Creighton’s regional Business Conditions Index fell into a range indicating healthy manufacturing growth for the next three to six months.
- Approximately one-half of supply managers expect supply chain disruptions to get worse for the first six months of 2022.
- Firms reported transportation issues such as trucking, air and rail delays were the greatest factors accounting for supply chain disruptions.
- One supply manager reported that, “Nonseasoned supply managers have changed their mode of operations from just-in-time to ‘have a hunch, buy a bunch.’”
OMAHA, Neb. (Dec. 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 18 of the last 19 months.
Overall Index: The Business Conditions Index, which uses the identical methodology as the national ISM, ranges between 0 and 100, fell to a still healthy 60.2 from October’s even stronger 65.2.
“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, approximately one-half of supply managers expect delays to worsen with only one in four 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.
Firms reported that transportation bottlenecks in trucking, and rail were the prime factors accounting for supply chain disruptions.
Supply managers named shortage of workers as the second most important factor producing supply disruptions, bottlenecks and delays.
Employment: The regional employment index remained significantly above growth neutral for November, but dropped to 61.1 from 66.1 in October.
“Despite healthy growth over the past year, compared to its pre-pandemic level, U.S. Bureau of Labor Statistics manufacturing employment data indicate that the region has lost 20,000 jobs, or 1.4%,” said Goss.
Other November comments from supply mangers were:
“Inventory is very low and orders are very high. Workforce is very hard to find. Where did all the people go?”
“Supply management is over buying. It is similar to last year's consumer toilet paper shortage.”
“In the current shortage mentality, commercial entities are over forecasting, over buying, trying to over inventory. Seasoned supply management has seen this scenario play out before.”
“There will be a strong market correction. There is no good reason why we have a backlog of ships waiting to off load on the west coast.”
Wholesale Prices: The wholesale inflation gauge for the month declined to an elevated 92.9 from October’s 96.5. “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 22.6% over the last 12 months with fuels expanding by 57.5%, farm products advancing by 18.5%, and metal products soaring by 45.5%....
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