From Creighton University's Heider College of Business:
February survey highlights:
- Creighton’s regional Business Conditions Index climbed into a range indicating healthy manufacturing growth.
- Russian invasion of Ukraine pushed the business confidence index to it’s lowest level since the survey began in 1994.
- In terms of 2022 challenges for their firm, more than four of ten supply managers, or 43.5%, ranked supply disruptions as tops, more than one-third, or 34.8%, indicated finding and hiring qualified workers as tops, and approximately 17.4% of supply managers named rising input prices as the top challenge.
- After falling below growth neutral for January, the employment index advanced to a solid reading indicating manufacturing job growth.
- Supply managers continue to report consistent and excessive inflationary pressures.
OMAHA, Neb. (March 1, 2022) – The Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, rose above growth neutral for the 21st straight month.
Overall Index: The Business Conditions Index, which uses the identical methodology as the national ISM, ranges between 0 and 100 with 50.0 representing growth neutral, climbed to 64.0 from January’s 56.2.
“Creighton’s monthly survey results indicate the region continues to add manufacturing activity at a healthy pace, but with only modest job additions. The Russian invasion into Ukraine will lengthen supply chain disruptions and push commodity prices upward. Interruptions in trade flows will also weaken the regional recovery which was already slowing significantly,” 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.
As reported by one supply manager, “The Russian-Ukraine dispute will disrupt the supply chain even further.”
Another supply manager said, “We are starting to see positive resolutions in supply chain issues. We are starting to see pockets of excess capacity in certain areas.”
Employment: After three straight months of declines, the regional employment index jumped to a solid 56.6 from 43.6 in January.
“This month the Creighton survey asked supply managers to project wage gains for 2022. On average, supply managers projected a modest 3% growth. Given the shortage of workers, this restrained increase is surprising,” said Goss.
Other February comments from supply mangers were:
“Over the last 18 months our raw materials increased dramatically and were in short supply. Beginning in December our industry slowed down. This alleviated the short supply and the cost of our major raw materials have begun to fall.”
“There is a lot of panic buying in the markets right now.”
“Past government excesses in spending, regulations, and debt will be tough on the economy in 2022.”
“Hiring, and keeping employees is the number one issue. Followed closely by pricing to stay ahead of inflation and of course that relates directly with both the costs and availability of raw materials and the ever-growing problem with shipping. Shipping prices and availability are very concerning.”
Wholesale Prices: The wholesale inflation gauge for the month fell to 80.5, indicating excessive inflationary pressures, but down from 87.5 in January. “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,” reported Goss.
“Given current significant inflationary pressures, I expect a rate hike at the Fed’s next meeting March 15-16. However, the current Russia/Ukraine war will push the Fed to raise the short-term rate by one-fourth of one percentage point instead of a more aggressive one-half percentage point,” said Goss.
“According to the U.S. Bureau of Labor Statistics, commodity prices were up approximately 19.3% over the last 12 months with fuels expanding by 35.0%, farm products advancing by 20.5%, and metal products soaring by 38.1%....
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