McMillan Warner Insurance



National & World Ag News Headlines
Mid-America Business Index Highest Since March 2019
USAgNet - 08/04/2020

The July 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 best level since March 2019.

Overall index: After falling below growth neutral for three straight months, the overall index bounced into positive territory for June and July. The Business Conditions Index, which ranges between 0 and 100, increased to 57.4 from June's 50.3.

"While the June and July's readings were much higher than I expected, they provide no grounds for celebration. It will take many more months of above 50.0 readings before the regional economy returns to pre-covid-19 levels," 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 July employment index continued to indicate job losses, but at a slower pace than in June. The July index rose to 48.5 from June's 38.9. More than half, or 55%, compared to 49% in April, reported cuts in hiring due to COVID-19.

According to U.S. Department of Labor data between pre-COVID-19 levels (February) and June the region lost 64,500 manufacturing jobs (-5.8%), and 888,000 jobs (-6.5%) total nonfarm jobs. While I expect job losses to continue, I anticipate that the rate will diminish considerably in the weeks and months ahead," said Goss.

Wholesale Prices: The wholesale inflation gauge for the month indicated an upturn in wholesale prices from June, with a wholesale price index of 65.2, up from 59.7 in June.

"Despite July's higher reading, I expect to see little inflationary pressures at the wholesale level in the weeks and months ahead, even with the massive economic stimulus programs from the Federal Reserve and the U.S. government," said Goss.

Other July comments from supply managers:

-"The most significant aspect of coronavirus has been much lower sales. We are starting to rebound, but it is likely that we will never recover what we have lost."

- "My positive/up rating for the economy is predicated on President Trump being re-elected. It would change to negative/down based on a liberal elected to the presidency."

- "The most significant COV related negative outcome for our company has been the reduced sales pull from our customers, creating a ripple effect - reduced purchases and internal furloughs/permanent reductions."

Confidence: Looking ahead six months, economic optimism, as captured by the July Business Confidence Index, climbed to a strong 68.3, its highest level since April 2018, and up from 65.3 in June.

"The federal stimulus plan, the Federal Reserve monetary incentive programs, and firm U.S. stock markets boosted confidence from June's already solid reading," said Goss.

Inventories: The regional inventory index for July, reflecting levels of raw materials and supplies, sank to 45.3 from last month's 52.8.

Trade: The regional trade numbers were mixed with new export orders rising to a weak 47.9 from June's 26.4 and May's record low of 15.9. Imports, on the other hand, rose to 53.9 from June's 32.0.

The U.S. Department of Commerce recently announced that June exports were 24% below year-ago levels. "Our July readings point to a continuation of this negative trend, but at a lower pace," said Goss.

Shipping: For July, seven of 10 supply managers reported that COVID-19 has produced shipping difficulties for their firm. This share is up significantly from the 51% of April survey participants that indicated such problems.

Other survey components of the July Business Conditions Index were: new orders at 67.2, up from 54.2 in June; the production or sales index expanded to 65.2 from June's 52.9; and speed of deliveries of raw materials and supplies index at 61.2 up from last month's 52.8 (indicating slower deliveries for July).

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.

The July Business Conditions Index for Minnesota climbed to 54.7 from 45.0 in June. Components of the overall June index from the monthly survey of supply managers were: new orders at 65.0, production or sales at 52.3, delivery lead time at 64.5, inventories at 42.3, and employment at 49.2. "According to BLS data since the onset of COVID-19, Minnesota has lost 249,000 jobs, or approximately 8.4% of its total employment, and 21,600, or approximately 6.7% of its manufacturing employment. Our surveys point to only slight job losses in the months ahead," said Goss.


Other National Headlines
Roth Manufacturing
Meyer Manufacturing
Copyright © 2024 - Farms.com. All Rights Reserved.