Midwest, Missouri business ratings jump in February despite wholesale inflation
Tue, Mar 14, 2023 3:30 PM
By Joe Mueller, The Center Square
Missouri and the Midwestern states' economies improved in February despite regional wholesale inflation soaring to a six-month high, according to Creighton University’s Mid-America Business Conditions Index.
Missouri’s business conditions climbed 10.6 points to an index amount of 52.7 in February after posting 42.1 in January, according to the report. A score greater than 50 indicates an expanding economy while scores 49 and below forecast a sluggish economy. It was Missouri’s highest number in three months.
The overall index, measuring nine Midwestern states, climbed to 56.1 in February after posting a 47 in January.
“Manufacturers in the state are experiencing positive growth with strong job gains,” the report said of Missouri. “Food processors, computer and electronic manufacturers and transportation equipment producers are experiencing sold growth over the past several months.”
Missouri’s index jumped 18.3 points during the early stages of the pandemic, from 44.7 in July 2020 to 63 in August 2020. It was the largest one-month gain in more than 10 years of tracking. The index declined 30.7 points during a four-month period last year, from 78 in March to 47.3 in July.
“After flashing recession warning signals for three consecutive months, Creighton’s monthly survey of manufacturing supply managers rebounded to its highest level since July of last year,” Ernie Goss, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics the Heider College of Business, said in a statement announcing the monthly report. “While it’s too early to tell if this is an end to the downward trend, it was certainly promising on the growth front. However, the soaring inflation reading serves as a very negative signal for financial markets and the Federal Reserve.”
The report’s wholesale inflation rating soared to 80.6 in February, up from 74.1 in January and 52.1 in December.
“Much like the recent rapid expansion in wholesale price inflation at the national level, Creighton’s survey is pointing to greater input price pressures at the producer level, or what is often referred to as the wholesale price index,” said Goss. “As a result of recent elevation in inflationary pressures at the wholesale level, I expect the Federal Reserve’s rate setting committee to announce a more aggressive rate hike of 50 basis points (0.50%) at its March 21-22 meetings to combat elevated inflation.”
The report said four of 10 supply managers surveyed expect a national recession this year. The report’s business confidence index for February was 38.1, up 13 from January’s rating of 25, but far below the rating of 50, considered growth neutral.
“Supply managers named supply delays and disruptions as their firm’s greatest threats for 2023,” Goss said.
In addition to Missouri, other states included in the survey with February index numbers are Arkansas (52.6), Iowa (53.2), Kansas (65.8), Minnesota (59.6), Nebraska (56.7), North Dakota (53.3), Oklahoma (54.9) and South Dakota (49.7).