After climbing above growth neutral for five straight months, the Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, fell below the growth neutral threshold for a second straight month.
The Business Conditions Index, which uses the identical methodology as the national Institute for Supply Management (ISM) and ranges between 0 and 100 with 50.0 representing growth neutral, increased to 49.5 in August from 46.1 in July.
“The Mid-America regional manufacturing economy is definitely losing momentum. Government data indicate that the regional manufacturing economy has lost jobs for the last three months,” 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.
“The rapid expansion in federal government spending will push the Federal Reserve to keep its foot on the economic brakes via raising short-term rate,” said Prof Goss. “I expect one more rate hike in quarter four of 2023 with no change at the Fed’s Sept. 19-20 meetings. Furthermore, I expect Federal Reserve Chair Jerome Powell to restate the Fed’s commitment to reducing the Fed’s balance sheet, which will put upward pressure on long-term interest rates.”
Trade numbers were once again weak for the month of August with new export orders climbing to 39.3 from July’s 30.8. August imports increased to 41.2 from July’s 35.3.
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.
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