From Creighton Uni's Heider College of Business, April 1:
March survey highlights:
- Creighton’s regional Business Conditions Index climbed into a range indicating healthy manufacturing growth.
- Supply chain disruptions and labor shortages pushed commodity prices briskly higher in the region.
- According to U.S. Bureau of Labor Statistics data, only Arkansas, among the nine states in the region, has returned to pre-pandemic non-farm employment levels.
- Concerns about the impacts of the Russia-Ukraine war, higher interest rates, soaring inflation and supply chain disruptions combined to push business confidence well below growth neutral.
OMAHA, Neb. (April 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 22nd straight month.
Overall Index: The Business Conditions Index, which uses the identical methodology as the national ISM and ranges between 0 and 100 with 50.0 representing growth neutral, soared to a very strong 71.3 from February’s healthy reading of 64.0.
“Creighton’s monthly survey results indicate the region continues to add manufacturing activity at a very healthy pace, but with modest job additions. Supply chain disruptions and labor shortages have pushed commodity prices briskly higher,” 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.
Even with higher economic activity, all suppliers were not optimistic about the economy. As reported by one supply manager, “Expect an economic correction, (i.e. a recession) — a recession due to inflation, Fed tightening money supply, and raising interest rates.”
Employment: Despite healthy growth in monthly economic activity for almost two years, manufacturers in the region have added jobs at a modest pace. That said, the employment index expanded for the second straight month to 60.6 from 56.6 in February. Except for Arkansas, non-farm employment levels for the remaining eight states remain below pre-pandemic levels.
“This month the Creighton survey asked supply managers to project wage gains for 2022. On average, supply managers projected wage growth at less than 3%,” Goss said. “Given the shortage of workers, this restrained increase is surprising.”
Other March comments from supply managers were:
- “Hard to distinguish between increased demand and panic buying.”
- “Inflation will be with us for decades to come assuming we will still have a country left to pass down to our children.”
- “The war with Ukraine is distracting our attention from China. I believe China is looking beyond Taiwan.”
Wholesale Prices: The wholesale inflation gauge for the month rocketed to 95.5, its highest level since October of last year and up from February’s 80.5. “Creighton’s monthly survey is tracking the highest and most consistent inflationary pressures at the wholesale level in more than a quarter of a century of conducting the survey,” Goss said.
Said one supply manager: “Inflation is a tax and leads to many negative economic responses. I would expect this to worsen over the next year with little hope that the midterm elections will change the tide.”
“Given current significant inflationary pressures, I expect a rate hike of one-half of one percentage point at the Fed’s next meeting on May 3-4 even though recession signals have grown over the last several months,” Goss said.
According to the U.S. Bureau of Labor Statistics, commodity prices are up approximately 20.3% over the last 12 months with farm products advancing by 24.7%, metal products expanding by 32.9% and fuels soaring by 39.3%.....
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