Positive, But Slow Growth Ahead for Mid-America:
Five Job Applicants for Every Three Openings
March survey results at a glance:
- Leading economic indicator declines, but remains positive for the month.
- Hiring gauge improves for the month.
- Businesses report 5 applicants for every 3 jobs.
- Strong dollar fails to restrain exports orders.
- Businesses report entry-level annual salary of $45,500 for college graduates at their firms.
For Immediate Release: April 1st, 2015
OMAHA, Neb. – The Creighton University Mid-America Business Conditions Index for March, a leading economic indicator for a nine-state region stretching from North Dakota to Arkansas, fell from February’s reading. Indices over the past several months are pointing to positive economic gains over the next three to six months for the region.
Overall index: The Business Conditions Index, which ranges between 0 and 100, sank to 51.4 from February’s 57.0. The regional index, much like the national reading, is pointing to positive, but slow growth for the first half of 2015.
“Nondurable manufacturing firms, including food processors and ethanol producers, reported sales, production and employment have weakened over the past several months. On the other hand, while our surveys are detecting weaker growth for firms tied oil production, the surveys have yet to record substantial negative outcomes for North Dakota and Oklahoma, two states with sizable oil industry investment,” said Ernie Goss, Ph.D., director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.
Employment: The regional employment gauge remained in a range indicating positive but slow job growth for manufacturing and value-added services firms in the region. The job gauge expanded to 52.5 from 50.8 in February. “This month we asked about the hiring situation in supply managers’ companies for the month. Businesses in the region reported receiving five applicants for every three jobs. Additionally, supply managers reported an average yearly entry level salary for college graduates of $45,500,” said Goss.
Wholesale Prices: The wholesale inflation index for March advanced to 55.7 from February’s 51.5. “A strengthening U.S. dollar and significantly lower fuel prices have pushed wholesale inflationary pressures in our surveys over the past several months to levels indicating only a modest upward movement,” said Goss.
Confidence: Looking ahead six months, economic optimism, as captured by the March business confidence index, decreased to 55.7 from February’s 58.4. “Improving economic expectations, resulting from lower energy prices, more than offset economic pessimism stemming from weakness in energy investment among energy and energy-linked businesses,” said Goss.
Inventories: The inventory index, which tracks the change in the level of raw materials and supplies, decreased to 48.4 from 56.6 in February.
Trade: The new export orders index grew to 56.4 from 54.4 in February. The import index for March rose to 53.5 from February’s 52.7. “Over the past six months, the value of the U.S. dollar has risen dramatically against the currencies of our chief trading partners. This movement has made US goods less competitively priced abroad and foreign goods more cheaply priced in the US. Despite this, the new export orders index stood at a solid level for February and increased in March. I do, however, expect exports and new export orders to move lower in the months ahead,” said Goss.
Other components: Other components of the March Business Conditions Index were new orders at 60.2, up from 57.1 in February; production or sales plunged to 41.8 from 63.8 in March; and delivery speed of raw materials and supplies fell to 54.0 from last month’s 56.7.
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.
The forecasting group’s overall index, referred to as the Business Conditions Index, ranges between 0 and 100. An index greater than 50 indicates an expansionary economy over the course of the next three to six months. The Business Conditions Index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time. This is the same methodology used by the National Institute for Supply Management, formerly the Purchasing Management Association, since 1931.
Survey results for December will be released on the first business day of next month, May 1, 2015.
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