Survey: Midwest Economy ‘Limping Along’ During October
(Radio Iowa) Iowa’s economy saw a slight gain during October, while the Midwestern economy dipped, according to the monthly survey of business leaders and supply managers across the nine-state region. Creighton University economist Ernie Goss says the Business Conditions Index, a leading economic indicator for the Midwest, is measured on a zero-to-100 scale with 50 being growth neutral. The region’s economy slipped a full point, from 52-point-5 in September to 51-point-5 in October.
“I would say the manufacturing economy, according supply managers, is limping along with still in the positive direction. This is a second straight month it’s been above growth neutral,” Goss says. “Sixty percent of the manufacturing supply managers expect a downturn in economic activity over the next six months.” Iowa’s economy is just below growth neutral, meaning it’s shrinking, but did show a glimmer of growth, rising from 48-point-5 in September to 49-even in October. Goss says the survey quizzed supply managers on what they saw as the largest challenge facing the Midwestern economy in the months ahead.
“Inflation was number-one. Four of ten said inflation is the biggest threat going forward,” Goss says. “Supply chain disruptions, two of 10 indicated that was the biggest impediment to growth ahead, and then three was labor shortages.” The regional hiring gauge sank below growth neutral during October, as job losses outpaced new hires.
“Approximately 25% of the supply managers reported job losses for their company,” Goss says. “On top of that, we’re still seeing labor hoarding, meaning, keeping workers on, just in case there’s difficulty in finding and hiring qualified workers. So they’re still holding on some of those workers, even with the downturn and even with slow business growth.” According to U.S. Bureau of Statistics data, Goss says Iowa’s manufacturing sector boosted employment by 0.9% over the past year, with the average hourly wage rate expanding by 2.3%, well below the 3.7% increase in consumer prices.
