The August Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, advanced above growth neutral, and to its highest level in two years.
After falling below growth neutral for three straight months, the overall index bounced into positive territory for June, July, and August. Creighton economist Ernie Goss, PhD. says the Business Conditions Index, which ranges between 0 and 100, increased to 60.0 from July’s 57.4.
“While the August reading was certainly encouraging, manufacturing activity in the region remains below pre-COVID-19 levels," said Goss.
For the first time since January of this year, the regional employment index moved above growth neutral. The August index climbed to 54.8, its highest level since July 2019, and up from last month’s July 48.5. Even though the insured unemployment rate for the region is approximately 4.5% higher than that immediately prior to COVID-19, four of five supply managers reported that their firms were experiencing difficulty finding and hiring qualified workers.
Looking ahead six months, economic optimism, as captured by the August Business Confidence Index, climbed to a strong 73.3, its highest level since February 2018, and up from 68.3 in July. The federal stimulus plan, the Federal Reserve monetary incentive programs, and U.S. stock markets boosted confidence from July’s already solid reading.
The regional trade numbers were mixed with new export orders rising to 58.3 from July’s 47.9. An expanding manufacturing sector pushed the import index to 56.8 from July’s 53.9.
The Kansas Business Conditions Index for August increased to 63.0 from July’s 59.2.
“According to U.S. Bureau of Labor Statistics, since the onset of COVID-19, the state’s manufacturing sector has lost approximately 13,000 jobs, a decline of 7.7% with transportation equipment manufacturing accounting for a large share of the losses,” 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 Business Conditions Index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time.