May survey highlights:
- Creighton’s regional Business Conditions Index climbed into a range indicating very strong growth for next three to six months.
- The wholesale inflation gauge for the month surged to a record high 96.3 from April’s 96.2, the previous record high.
- Almost 30% of supply managers identified soaring input prices as the greatest 2021 economic challenge for their firm.
- Even with a surging manufacturing sector, regional manufacturing added jobs at a modest pace.
- Almost 23% of manufacturers named finding and hiring qualified workers as the greatest 2021 challenge to their firm.
- As a result of shortages of workers, average hourly wages for regional manufacturing production workers advanced by a strong 4.9% over the past 12 months according to the U.S. Bureau of Labor Statistics data.
- Supply bottlenecks pushed deliveries to their slowest pace on record.
OMAHA, Neb. (June 1, 2021) – For the 12th straight month, the Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, moved into vigorous growth territory.
Overall Index: After rocketing to a record high 73.9 in April, the Business Conditions Index, which ranges between 0 and 100, slipped to still strong 72.3 for May. However, manufacturing supply managers report that labor shortages and supply bottlenecks continue to restrain growth.
Almost one of three, or 30%, of supply managers identified soaring input prices as the greatest 2021 economic challenge for their firm.
More than nine out of 10 supply managers reported supply bottlenecks, or delays, for May with 40% indicating that the delays were significant.
“Since bottoming in April of last year, Mid-America has added approximately 1.0 million jobs for an 8.3% advancement. Creighton’s monthly survey results indicate that the region is adding manufacturing business activity at a healthy pace, and that growth will remain strong with the overall regional economy returning to pre-pandemic levels in the first quarter of 2022,” 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.
Employment: The regional employment index remained above growth neutral for May, but sank from 57.2 in April to 55.6 for the month. “Almost one-fourth, or 23%, of manufacturers named finding and hiring qualified workers as the greatest 2021 challenge to their firm,” said Goss.
“The shortage of production workers continues to push wages higher. U.S. Bureau of Labor Statistics data indicate that average hourly earnings of manufacturing production workers in the region expanded by a strong 4.9% over the past 12 months,” said Goss.
Other comments from May survey participants:
- “Delays in deliveries started occurring in February. Prior to that no issues.”
- “Great deal of uncertainty: How will economy open up from Covid shutdowns.”
- “Supply chain slowdowns and trying to increase our workforce have been the biggest cause of getting back to full production capacities.”
- “Raw material supply continues to be a major concern- from metals to chemicals. Logistics cost and extended lead times to obtain products are also at high impact. And of course, the lack of labor and rising cost of labor.”
Wholesale Prices: The wholesale inflation gauge for the month surged to a record high 96.3 from April’s 96.2, the previous record high.
“At the wholesale level, Creighton’s survey is tracking higher and higher inflationary pressures. Metal products and lumber, for example, are experiencing significant upward pressures in wholesale prices. Since June of last year, metal prices have expanded by 20.8%, and lumber products have advanced by 63.1% according to U.S. Bureau of Labor Statistics data. Despite rapidly expanding inflationary pressures at the wholesale level, the Federal Reserve remains committed to its current expansionary policy,” said Goss.
Approximately 30% of supply managers identified rapidly rising input prices as their firm’s greatest 2021 economic challenge.
Confidence: Looking ahead six months, economic optimism, as captured by the May Business Confidence Index, climbed to a strong 88.6 from April’s 64.8.
“Despite supply bottlenecks, rapidly rising prices and labor shortages the expanding regional economy pushed economic confidence among manufacturing supply managers higher for the month,” said Goss.
Inventories: The regional inventory index, reflecting levels of raw materials and supplies, rose to 72.0 from last month’s 70.0.
Trade: Despite supply chain bottlenecks, regional trade numbers were solid for the month. The new export orders index climbed to 76.5 from April’s 58.8. An expanding domestic manufacturing sector underpinned May’s import reading of 55.0, which was down from April’s 57.9.
Other survey components of the May Business Conditions Index were: new orders declined to 75.0 from 81.5 in April; the production or sales index sank to a very strong 68.5 from April’s 78.6; and the index for the speed of deliveries of raw materials and supplies soared a record high of 90.8, from April’s 84.0, also a record high. A higher reading indicates slower deliveries.
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 forecasting group’s overall index, referred to as the Business Conditions Index, ranges between 0 and 100. An index greater than 50 indicates an expansionary economy over the course of the next three to six months.
The Business Conditions Index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time. This is the same methodology, used since 1931 by the Institute for Supply Management (ISM), formerly the National Association of Purchasing Management. The Mid-America report is produced independently of the national ISM.
Arkansas: The May Business Conditions Index for Arkansas decreased to 67.8 from 73.9 in April. Components from the May survey of supply managers were: new orders at 72.9, production or sales at 65.9, delivery lead time at 87.6, inventories at 60.7, and employment at 52.1. “According to U.S. Bureau of Labor Statistics, average hourly wages for manufacturing production workers in Arkansas rose a hefty 6.1% over the last 12 months. Both durable goods producers and nondurable goods manufacturers in the state accounted for the very healthy gains,” said Goss.
Iowa: Iowa’s Business Conditions Index for May rose to 70.2 from 67.9 in April. Components of the overall May index were: new orders at 72.7, production, or sales, at 65.7, delivery lead time at 86.7, employment at 53.9, and inventories at 74.6. “According to U.S. Bureau of Labor Statistics, average hourly wages for manufacturing production workers rose 7.3% over the last 12 months. Wage gains were much healthier among nondurable goods producers than for durable goods manufacturers over the 12-month period,” said Goss.
Kansas: The Kansas Business Conditions Index for May fell to 71.8 from April’s 75.0. Components of the leading economic indicator from the monthly survey of supply managers were: new orders at 74.4, production or sales at 67.6, delivery lead time at 85.6, employment at 52.5, and inventories at 79.1. “According to U.S. Bureau of Labor Statistics, average hourly wages for Kansas manufacturing production workers fell by 2.7% over the last 12 months. The state’s durable goods producers, accounted for the losses, while nondurable goods manufacturers, experienced modest gains,” said Goss.
Minnesota: The May Business Conditions Index for Minnesota sank to 74.5 from 79.7 in April. Components of the overall May index were: new orders at 77.5, production or sales at 71.1, delivery lead time at 91.3, inventories at 65.6, and employment at 67.2. “According to U.S. Bureau of Labor Statistics, Minnesota’s average hourly wages for manufacturing production workers climbed by a solid 2.9% over the last 12 months. Both nondurable and durable goods producers in the state accounted for the gains,” said Goss.
Missouri: The May Business Conditions Index for Missouri decreased to 69.5 from 73.2 in April. Components of the overall index from the survey of supply managers for May were: new orders at 72.8, production or sales at 65.8, delivery lead time at 87.4, inventories at 66.9, and employment at 54.3. “According to U.S. Bureau of Labor Statistics, average hourly wages for Missouri’s manufacturing production workers climbed by a very healthy 7% with wage gains greater for durable goods producer than for nondurable goods producers,” said Goss.
Nebraska: Nebraska’s overall index for May dipped to 76.1 from 76.8 in April. Components of the index from the monthly survey of supply managers for May were: new orders at 74.6, production or sales at 67.9, delivery lead time at 96.3, inventories at 82.3, and employment at 59.3. “According to U.S. Bureau of Labor Statistics, average hourly wages for Nebraska’s manufacturing production workers climbed by a modest 2.1% with wage gains for nondurable goods producers, but wage losses for durable goods manufacturers in the state,” said Goss.
North Dakota: The May Business Conditions Index for North Dakota bounced to 75.2 from 74.3 in April. Components of the overall index for May were: new orders at 78.9, production or sales at 70.5, delivery lead time at 92.5, employment at 65.8, and inventories at 68.1. “According to U.S. Bureau of Labor Statistics, average hourly wages for North Dakota’s manufacturing production workers climbed by a very strong 7.0% with gains somewhat larger for durable goods producers than non-durable goods manufacturers,” said Goss.
Oklahoma: Oklahoma’s Business Conditions Index expanded above growth neutral in May. The overall index fell to 68.9 from 70.9 in April. Components of the overall May index were: new orders at 72.8, production or sales at 65.8, delivery lead time at 87.2, inventories at 64.7, and employment at 54.2. “According to U.S. Bureau of Labor Statistics, Oklahoma’s average hourly wages for manufacturing production workers climbed by a very strong 12.5% with gains somewhat larger for nondurable goods producers than durable goods manufacturers,” said Goss.
South Dakota: The May Business Conditions Index for South Dakota climbed to 75.5 from 74.9 in April. Components of the overall index from the May survey of supply managers in the state were: new orders at 74.5, production or sales at 67.7, delivery lead time at 95.7, inventories at 80.8, and employment at 58.9. “According to U.S. Bureau of Labor Statistics, South Dakota average hourly wages for manufacturing production workers climbed by a very weak 0.2% with gains for nondurable goods producers, and slight wage losses for durable goods manufacturers,” said Goss.
Survey results for June will be released on July 1, 2021, the first business day of the month.
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For historical data and forecasts visit our website at
http://business.creighton.edu/organizations-programs/economic-outlook
