Mid-America Business Index Climbs Again

(KFOR NEWS February 3, 2020) JANUARY HIGHLIGHTS:

The overall index moved above growth neutral for the third time in the past four months, rising to its highest reading since March 2019.
Hiring index rose above growth neutral.
January passage of the USMCA and Phase 1 of the Chinese trade agreement boosted the regional confidence index.
Approximately 56% expect signing of USMCA and Phase 1 of the Chinese agreement to have a positive impact on business prospects.
Due to the trade war, 28.2% of supply managers report changing international vendors for purchases.

The Creighton University Mid-America Business Conditions Index, a leading economic indicator for Nebraska and 8 other Midwest states, moved above growth neutral for a second straight month.

Overall index: This is the third time in the past four months the overall reading has climbed above growth neutral 50.0. The Business Conditions Index, which ranges between 0 and 100, rose to a solid 57.2, its highest level since March 2019, and up from December’s 50.6.

This month’s very solid reading, plus January’s signing of USMCA and Phase 1 trade agreement with China, bode well for the regional manufacturing economy. However, the survey was conducted before the significant negative outcomes from the coronavirus were reported.

“The negative impacts from this virus could place significant negative pressure on the regional economy in the weeks ahead,” 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.

Said one supply manager, “The three-day extension of CNY (Chinese New Year) due to coronavirus may affect future production dates.”

Employment: The January employment index increased to 53.8 from December’s four-year low of 45.6. In past months, trade constraints combined with the lack of available workers continued to constrain job growth in the region. In December, seven of 10 supply managers indicated that finding and hiring qualified workers was the greatest 2020 challenge for their firms.

“However, January’s positive employment reading was a positive and unexpected outcome,” said Goss.

The weakness in the region’s manufacturing and agriculture sector has spilled over into the broader regional economy. Over the past 12 months, the Mid-America region has added jobs at a 0.6% pace, or less than half the 1.4% rate of the U.S. economy.