The economy in nine Midwest and Plains states continues to improve to levels seen before the start of the coronavirus pandemic last year, according to a new monthly survey of business leaders, but concerns about rising inflation and bottlenecks in the supply chain are tempering economic optimism.
February’s overall index of the Creighton University Mid-America Business Conditions suggests improved growth, coming in at at a strong 69.6 from January’s 67.3.
Any score above 50 on the survey’s indexes suggests growth, while a score below 50 suggests recession.
But more than eight of 10 supply managers reported supply bottlenecks and delays of deliveries in receiving raw materials and supplies from vendors, said Creighton University economist Ernie Goss, who oversees the survey. One supply manager noted in the January survey that his company’s order fulfillment times that had been at 8 to 10 weeks have extended to 20 to 22 weeks.
The survey also is tracking higher inflationary pressure at the wholesale level, Goss said.
“Metal products and lumber, for example, are experiencing significant upward pressures in prices,” Goss said.
The survey’s confidence index, which looks ahead six months, dropped to 50.0 from January’s 53.6, and Goss placed the blame squarely with business leaders’ concerns over inflation and supply disruptions.
The employment index rose to 65.6 in February from January’s 57.2, with Goss noting that the region has regained almost half the manufacturing jobs lost to the pandemic.
The monthly survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The overall index for Arkansas increased to 79.8 from January’s 76.9. Components from the February survey of supply managers were: new orders at 81.4, production or sales at 79.2, delivery lead time at 83.0, inventories at 81.1, and employment at 81.1.
“Since July of last year, both durable and nondurable goods manufacturers in the state have expanded at a healthy pace. According to U.S. Bureau of Labor Statistics data, manufacturing wages for production workers in Arkansas have expanded by 4.6% since the onset of COVID-19,” Goss said.
Read the full article on the Arkansas Business website here.
