November’s Mid-America Manufacturing Index Negative Again with Job Losses and Mild Inflation

November 2024 Survey Highlights:
*For the sixth time this year, the overall or Business Conditions Index fell below growth neutral.
*For a second straight month, the wholesale price inflation gauge rose.
*As a result of a potential Jan. 15 longshoremen strike, 38.7% of supply managers named supply chain disruptions as the top challenge for their firm over the next year.
*The region’s employment index slumped below growth neutral for an 11th straight month.
*Supply managers remained pessimistic regarding the economic outlook, with approximately 41% expecting a recession or a sharp downturn in economic activity in the next six months.
*According to the latest U.S. International Trade Administration data, the regional manufacturing sector expanded 2024 year-to-date exports by $1.9 billion from the same period in 2023 for a 2.6% gain.
*Despite slowing growth and cooling inflationary pressures, Goss expects the Federal Reserve to leave interest rates unchanged at their next meetings on Dec. 17-18.
 
OMAHA, Neb. (December 2, 2024) — For the sixth time in 2024, the Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, sank below the 50.0 growth neutral threshold.

Overall Index: The Business Conditions Index, which uses the identical methodology as the national Institute for Supply Management (ISM) and ranges between 0 and 100 with 50.0 representing growth neutral, slumped to 49.6 from 51.1 in October. This represents the 11th time in 2024 that the index has drifted slightly above and below growth neutral.

“The overall index, much like the U.S. reading, has vacillated around growth neutral since December 2023. Even so, manufacturers in the nation and region continue to shed jobs. In terms of impending economic threats, with an East/Gulf Coast longshoreman strike looming on Jan. 15, supply managers named supply chain disruptions as the top potential risk to their firm’s business operations in the months ahead,” said Ernie Goss, PhD, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.

The Mid-America report is produced independently of the national ISM.

When asked to identify the top economic challenges for their firm’s operations in the months ahead, 38.7% named supply chain disruptions; 27.8% reported higher inflation; 11.1% identified labor shortages; 5.6% listed cyber threats; and the remaining 16.8% named other issues.   

Employment: After climbing to growth neutral in December of last year, the employment gauge has tumbled below 50.0 for the past 11 months. The November employment index improved slightly to a weak 44.4 from October’s 44.2. Despite falling manufacturing employment, approximately 11.1% named labor shortages as their firm’s top threat to business operations in the months ahead.  

U.S. Bureau of Labor Statistics data show that seasonally adjusted regional manufacturing employment fell by 2,000 jobs (-0.2%) thus far in 2024. During the same period, U.S. manufacturing employment sank by 90,000 or -0.7%.  

Comments from supply managers in November:

“The implementation of higher steel tariffs will have a direct impact to our customers.”
“First, inflation is the unlawful tax. Impacts every aspect of the business world. Second, I look forward to a more business-friendly experience with the incoming governance. Third and most important, we need motivated people to fill open positions, and I look forward to a culture that embraces work and not staying home playing video games.”
“We go into the ports around the country, and any strike has the ability to cause chaos in the marketplace. Not a fan of union jobs as I see it as causing many companies to go overseas.”
“I also see the closure of companies because of all the demands from unions. There was a time in America's past where they were needed, but I believe that time has passed.”
 
Wholesale Prices: The November price gauge rose slightly to 56.6 from 56.5 in October. “The regional inflation yardstick has clearly moved into a range indicating inflationary pressures moving toward the Federal Reserve’s target. As a result, I expect the Fed to leave interest rates unchanged at its Dec. 17-18 meetings,” said Goss.

Confidence: Looking ahead six months, economic optimism, as captured by the November Business Confidence Index, rose sharply to 55.6 from 47.1 in October. “Approximately, 41% of supply managers expect worsening business conditions over the next six months,” said Goss.

Inventories: The regional inventory index, reflecting levels of raw materials and supplies, advanced to 51.8 from 48.5 in October. “The potential for an East/Gulf Coast longshoremen’s strike on Jan. 15, 2025, was a significant factor pushing inventory levels higher,” said Goss. 

Trade: The relatively strong dollar continues to make U.S. goods less competitively priced abroad and pushed the export index down to 45.5 from 47.7 in October. A weak regional economy slowed purchases from abroad as the import reading stood at 49.1, which was unchanged from October’s reading.

According to the latest U.S. International Trade Administration data, the regional manufacturing sector expanded 2024 year-to-date exports by $1.9 billion from the same period in 2023 for a 2.6% gain.

Other survey components of the November Business Conditions Index were: new orders dipped to 48.6 from 49.4 in October; the production or sales index fell to 48.2 from October’s 54.1; and the speed of deliveries of raw materials and supplies softened to 55.2 from October’s 59.5. This decline indicates supply chain disruptions and delivery bottlenecks declined for the month.

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.

Below are the state reports:

Arkansas: The state’s November Business Conditions Index declined to 47.3 from 51.3 in October. Components from the November survey of supply managers were: new orders at 46.7; production or sales at 49.3; delivery lead time at 57.0; inventories at 44.5; and employment at 39.1. According to the latest U.S. International Trade Administration data, Arkansas’ manufacturing sector expanded 2024 year-to-date exports by $158.9 million from the same period in 2023 for a 3.8% gain.

Iowa: The state’s Business Conditions Index for November slumped to 44.7 from October’s weak 48.0. Components of the overall November index were: new orders at 45.6; production or sales at 45.9; delivery lead time at 51.6; employment at 38.9; and inventories at 41.7. According to the latest U.S. International Trade Administration data, Iowa’s manufacturing sector experienced a $1.1 billion drop in 2024 year-to-date exports compared to the same period in 2023 for an 8.5% decline.

Kansas: The Kansas Business Conditions Index for November dropped to 49.8 from 51.9 in October. Components of the leading economic indicators from the monthly survey of supply managers for November were: new orders at 47.0; production or sales at 50.3; delivery lead time at 58.7; employment at 44.0; and inventories at 48.8. According to the latest U.S. International Trade Administration data, Kansas’ manufacturing sector expanded 2024 year-to-date exports by $316.9 million from the same period in 2023 for a 3.4% gain.

Minnesota: The November Business Conditions Index for Minnesota increased to 53.4 from 47.2 in October. Components of the overall November index were: new orders at 52.8; production or sales at 51.4; delivery lead time at 60.4; inventories at 53.3; and employment at 49.1. According to the latest U.S. International Trade Administration data, Minnesota’s manufacturing sector expanded 2024 year-to-date exports by $2.1 billion from the same period in 2023 for a 12.6% gain.

Missouri: The state’s November Business Conditions Index dropped to 47.4 from 50.7 in October. Components of the overall index from the survey of supply managers for November were: new orders at 46.7; production or sales at 49.3; delivery lead time at 57.1; inventories at 44.6; and employment at 39.2. According to the latest U.S. International Trade Administration data, Missouri’s manufacturing sector expanded 2024 year-to-date exports by $1.6 billion from the same period in 2023 for a 13.3% gain.

Nebraska: For the seventh time in the past eight months, Nebraska’s overall index rose above growth neutral. The state’s November Business Conditions Index expanded to a regional-high 57.0 from 51.8 in October. Components of the index from the monthly survey of supply managers for November were: new orders at 48.0; production or sales at 53.4; delivery lead time at 63.5; inventories at 61.5; and employment at 58.3. According to the latest U.S. International Trade Administration data, Nebraska’s manufacturing sector expanded 2024 year-to-date exports by $170.9 million from the same period in 2023 for a 3.3% gain.

North Dakota: The state’s overall or Business Condition Index, advanced above growth neutral for a fourth consecutive month to 52.2, which was down from 54.1 in October. Components of the overall index for November were: new orders at 47.4; production or sales at 51.4; delivery lead time at 60.4; employment at 48.9; and inventories at 53.2. According to the latest U.S. International Trade Administration data, North Dakota’s manufacturing sector experienced a drop in 2024 year-to-date exports of $2.2 billion from the same period in 2023 for a 43.2% decline.

Oklahoma: The state’s Business Conditions Index declined to 50.2 from 52.1 in October. Components of the overall November index were: new orders at 47.1; production or sales at 50.5; delivery lead time at 59.0; inventories at 49.6; and employment at 44.8. According to the latest U.S. International Trade Administration data, Oklahoma’s manufacturing sector expanded 2024 year-to-date exports by $992.8 million from the same period in 2023 for a 22.2% gain.

South Dakota: The November Business Conditions Index for South Dakota plummeted to 42.6 from October’s 50.4. Components of the overall November index were: new orders at 46.1; production or sales at 47.3; delivery lead time at 53.9; inventories at 36.3; and employment at 29.7. According to the latest U.S. International Trade Administration data, South Dakota’s manufacturing sector 2024 year-to-date exports sank by $199.5 million from the same period in 2023 for a decline of 11.7%.

Survey results for the month of December will be released on Jan. 2, 2025, the first business day of the month.