Regional business index rebounds

OMAHA, Neb. — The Creighton University Mid-America Business Conditions Index, a key economic indicator for the nine-state region from Minnesota to Arkansas, rebounded above the growth neutral threshold in December after slipping below it in November. The Business Conditions Index, mirroring the national Institute for Supply Management (ISM), rose to 50.3 from November's 42.2, reflecting a more optimistic outlook.

Despite the positive uptick, supply managers expressed persistent concerns about the 2024 economy, with 46% anticipating a recession in the first half of the year. Only 19% foresee an economic expansion during this period, according to a survey conducted by Creighton University’s Economic Forecasting Group.

Ernie Goss PhD, director of the group, highlighted the impact of federal government spending and debt on the Federal Reserve's ability to lower interest rates in 2024. Goss predicted a rate cut in March but expected no changes during the Fed's rate-cutting committee meetings on January 30-31.

In terms of employment, the hiring gauge recovered to 50.0 from 42.5 in November, following two consecutive months of below-growth-neutral readings. However, the region's manufacturing sector experienced a loss of 4,400 jobs over the past 12 months, with an average hourly wage rate increase of 3.4%, surpassing the 3.1% rise in consumer prices.

Wholesale prices, measured by the inflation gauge, declined to 57.7 from November's 71.1. Supply managers predicted a 5.9% increase in prices for inputs in 2024, well above the 0.9% wholesale inflation recorded by the U.S. Bureau of Labor Statistics for the 12 months ending in November 2023.

Looking ahead six months, the Business Confidence Index dipped to a weak 35.2 in December, reflecting a lack of optimism among supply managers. The regional inventory index rose to 46.0 from November's 42.6, indicating concerns among manufacturers about the sales outlook.

Trade numbers for December showed weakness, with new export orders dropping to 47.0 from November's 54.6. Imports fell to 36.9 from 46.7 in November. However, the U.S. International Trade Administration reported a 4.3% growth in exports of manufactured goods from the nine-state region, reaching $77.9 billion for the first 10 months of 2023.

State-specific data revealed variations in economic conditions. Nebraska's Business Conditions Index, for the third consecutive month, fell below growth neutral but rose to 49.4 from 39.3 in November. The state's manufacturing sector added 2,100 jobs, a 2.9% increase, with an average hourly wage rate growth of 6.7% over the past 12 months.

Survey results for January will be released on February 1, 2024. The Creighton Economic Forecasting Group has conducted monthly surveys of supply managers in nine states since 1994, providing leading economic indicators for the Mid-America region. States included in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma, and South Dakota.