The April Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, plummeted for the month reaching its lowest level since the middle of the last U.S. recession. After falling below growth neutral for March, the overall index slumped to its lowest level since February of 2009. The Business Conditions Index, which ranges between 0 and 100, tumbled to 35.1 from March's 46.7.
"According to Creighton's April survey of regional manufacturing supply managers, the coronavirus had a less significant impact on the manufacturing sector than other areas of the economy more directly tied to the consumer. This is a consumer led recession with manufacturing lagging. As a result, I expect the manufacturing to worsen in next month," said Ernie Goss, PhD, director of Creighton University's Economic Forecasting Group in the Heider College of Business.
Goss added that 50% of supply manager reported business stoppages for their vendors in Creighton's April survey, while more than one-third detailed shipping problems." The April employment index slumped to a record low of 26.2 from March's already weak 34.7.
"In the middle of March U.S. Department of Labor data showed that only 164,040 workers in the nine-state region were unemployed and receiving unemployment insurance benefits," said Goss. "This represented only 1.3% of individuals covered by the unemployment insurance systems. By the first week of April, 980,196 workers were receiving unemployment insurance benefits or 7.5% of covered worker.
Some better news, looking ahead six months, economic optimism, as captured by the April Business Confidence Index, rebounded to a still weak 45.5 from March's record low 14.5.
"The federal stimulus plan, the Federal Reserve monetary incentive programs, and the rebound in U.S. stock markets boosted confidence from March's record lows," said Goss.
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.
The Kansas Business Conditions Index for April tumbled to 36.3 from March's 48.3. Components of the leading economic indicator from the monthly survey of supply managers for April were: new orders at 23.2, production or sales at 39.2, delivery lead time at 69.7, employment at 27.0, and inventories at 22.5. "Between the second week of March, and the first week of April, workers in the state receiving unemployment compensation rose from 9,700, or 0.7% of workers covered by the unemployment system to 78,300 individuals, or 5.7%," said Goss.
