MPB Builders

National & World Ag News Headlines
Mid-America Business Index Remains in Recession
USAgNet - 06/01/2020

The May Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, advanced to a still recessionary level.

Overall index: After falling below growth neutral for March, the overall index has remained in recessionary territory for two straight months. The Business Conditions Index, which ranges between 0 and 100, increased to 43.5 from April's 35.1, but down from March's 46.7.

"According to Creighton's May survey of regional manufacturing supply managers, COVID-19 had a less significant impact on the manufacturing sector than other areas of the economy more directly tied to the consumer. This is a consumer led recession with manufacturing lagging. Nonetheless, Creighton's survey indicates that the regional manufacturing sector is trapped in a recession," 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 May employment index continued to indicate job losses, but at a slower pace than in April. The May index rose to 40.0 from April's record low of 26.2.

"In the middle of March U.S. Department of Labor data showed that only 160,170 workers in the nine-state region were unemployed and receiving unemployment insurance benefits. This represented only 1.3% of individuals covered by the unemployment insurance system. By the first week of May 1,328,520 workers were receiving unemployment insurance benefits, or 10.5% of covered workers," said Goss.

As a result of COVID-19: 34% of firms extended the period of paying outstanding invoices; 35.9% revised or cancelled contracts; and 28.2% moved purchases from foreign sources to domestic sources.

Wholesale Prices: The wholesale inflation gauge for the month indicated deflationary pressures at the wholesale level with a wholesale price index of 48.6 for May, which was up from 44.0 in April.

"I expect to see deflationary pressures at the wholesale level in the weeks and months ahead despite the Federal Reserve's, and the U.S. government's record economic stimulus programs," said Goss.

Comments from supply managers from the May survey included:

- "With most of our business coming from the public sector, I expect a subdued peak season and a meager winter as states and municipalities tighten fiscal belts for the foreseeable future."

- "Trusted business relationships are more valuable than ever."

- "Our management team will evaluate bringing more people back (from home office) in phases after two weeks."

- "The beginning of May was horrible for sales and employment, with a slight uptick expected toward the end of May....nowhere near what it was in February (far below)."

Confidence: Looking ahead six months, economic optimism, as captured by the May Business Confidence Index, rebounded to 56.6 from April's weak 45.5.

"The federal stimulus plan, the Federal Reserve monetary incentive programs, and the rebound in U.S. stock markets boosted confidence from April's low reading," said Goss.

Inventories: The regional inventory index for May, reflecting levels of raw materials and supplies, climbed to 48.6 from last month's 36.9.

Trade: The regional trade numbers were very negative for the month with new export orders tumbling to a record low of 15.9 from April's 19.4. Imports fell to 36.0 from 38.7 in April.

Other survey components: Other components of the May Business Conditions Index were new orders at 31.7, up from April's 21.0; the production or sales index expanded to 33.3 from April's 23.3; and speed of deliveries of raw materials and supplies index at 63.8 was down from last month's 68.3.

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.

Send this article to a friend

Other National Headlines
Cloverdale TMR Mixers
Gehling Auction
Copyright © 2020 - All Rights Reserved.