Iowa's economy grew slightly in October while the Midwest economy contracted, according to the monthly survey of business leaders and supply managers across the nine-state region.
Creighton University economist Ernie Goss says the Business Conditions Index, a leading economic indicator for the Midwest, is measured on a scale of zero to 100 with 50 being neutral for growth. The region's economy slipped completely, from 52.5 in September to 51.5 in October.
“I would say the manufacturing economy, according to supply managers, is limping along in the positive direction. This is the second month in a row that growth has been above neutral,” says Goss. “Sixty percent of manufacturing supply managers expect a slowdown in economic activity over the next six months.”
Iowa's economy is just below growth neutral, meaning it's contracting, but it showed a glimmer of growth, rising from 48.5 in September to 49 – even in October.
Goss says the survey asked procurement managers about the biggest challenge facing the Midwest economy in the coming months.
“Inflation was number one. Four in ten said inflation is the biggest threat going forward,” says Goss. “Supply chain disruptions were indicated by two out of 10 as the biggest barrier to future growth, followed by labor shortages with three.”
The regional hiring index dipped below growth neutral in October as job losses outpaced new hires.
“About 25% of procurement managers reported job losses for their company,” says Goss. “Furthermore, we continue to see labor pooling, i.e. retaining workers, only where there is difficulty in finding and hiring skilled workers. So they're still keeping some of those workers, even with the recession and even with slow business growth.”
According to U.S. Bureau of Labor Statistics data, Goss says Iowa's manufacturing sector grew employment by 0.9 percent last year, with average hourly wages rising 2.3 percent, well below rising prices. consumer by 3.7%.
