Mid-America index highest since March 2019, employment losses continue

OMAHA, Neb. – The July Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, advanced above growth neutral and to its best level since March 2019.         

Overall index: After falling below growth neutral for three straight months, the overall index bounced into positive territory for June and July. The Business Conditions Index, which ranges between 0 and 100, increased to 57.4 from June’s 50.3.

“While the June and July’s readings were much higher than I expected, they provide no grounds for celebration. It will take many more months of above 50.0 readings before the regional economy returns to pre-covid-19 levels,” Ernie Goss said. Goss is director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.  

The July employment index continued to indicate job losses, but at a slower pace than in June. The July index rose to 48.5 from June’s 38.9. More than half, or 55%, compared to 49% in April, reported cuts in hiring due to COVID-19.  

“While I expect job losses to continue, I anticipate that the rate will diminish considerably in the weeks and months ahead,” Goss said.   

The wholesale inflation gauge for the month indicated an upturn in wholesale prices from June, with a wholesale price index of 65.2, up from 59.7 in June.

“Despite July’s higher reading, I expect to see little inflationary pressures at the wholesale level in the weeks and months ahead, even with the massive economic stimulus programs from the Federal Reserve and the U.S. government,” Goss said.

Looking ahead six months, economic optimism, as captured by the July Business Confidence Index, climbed to a strong 68.3, its highest level since April 2018, and up from 65.3 in June.  

“The federal stimulus plan, the Federal Reserve monetary incentive programs, and firm U.S. stock markets boosted confidence from June’s already solid reading,” Goss said.

The Creighton Economic Forecasting Group has conducted the monthly survey of supply managers in nine states, including Kansas and Missouri, since 1994 to produce leading economic indicators of the Mid-America economy.

The Kansas Business Conditions Index for July increased to 59.2 from June’s 45.1. Components of the leading economic indicator from the monthly survey of supply managers for July were: new orders at 68.0, production or sales at 64.8, delivery lead time at 53.1, employment at 48.3, and inventories at 61.7.  “According to BLS data since the onset of COVID-19, Kansas has lost 78,000 jobs, or approximately 5.5% of its total employment, and 10,400, or approximately 6.2% of its manufacturing employment. Our recent surveys point to only slight job losses in the months ahead,” Goss said.

The July Business Conditions Index for Missouri sank to 44.7 from June’s 50.5. Components of the overall index from the survey of supply managers for July were: new orders at 66.6, production or sales at 58.9, delivery lead time at 25.4, inventories at 40.6, and employment at 31.8. “According to BLS data since the onset of COVID-19, Missouri has lost 189,000 jobs, or approximately 6.6% of its total employment, and 16,000, or approximately 5.9% of its manufacturing employment. Our surveys point to continued job losses in the months ahead,” Goss said.