Factory output goes into high gear

  • Article by: DEE DEPASS , Star Tribune
  • Updated: May 1, 2014 - 9:15 PM

In Minnesota, factories showed overall growth in April, although employment slipped.

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Manufacturing conditions continued to improve in the Midwest and throughout the nation in April, though Minnesota showed a decline in factory jobs. File photo of the manufacturing technologies lab at Richard J. Daley College in Chicago last week.

Photo: Daniel Acker, Bloomberg

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Manufacturing is on the upswing in the Midwest and throughout the nation.

A report Thursday by Creighton University showed the highest growth in three years for the Midwest as new orders, factory production, exports and prices took off last month. The Mid-America Business Conditions Index hit a hearty 60.4 in April, up from 58.2 in March.

“Much like the national economy, the Mid-America region continues to expand with growth prospects improving monthly. This is the highest overall reading that we have recorded since March 2011,” said Ernie Goss, director of Creighton University’s Economic Forecasting Group. Any index over 50 indicates growth and anything below 50 signals contraction.

The Mid-America report tracks manufacturing activity in Minnesota, Iowa, North Dakota, South Dakota, Nebraska, Kansas, Missouri, Arkansas and Oklahoma.

Gains from the nine-state region are yet another sign of economic improvement. Employment growth slowed slightly, but still showed solid results in April amid strong sales of vehicles, appliances, metals and other durable goods.

In Minnesota, factories continued to show overall growth for a 17th consecutive month. However, its index dipped to a still-healthy 64.9 in April from 66.1 in March. While the state saw sizable growth in new orders, production, delivery lead time improvements, and inventory improvements, employment slipped.

“Despite impressive gains among durable goods and nondurable goods manufacturers in the state over the past year, Minnesota’s manufacturing sector has almost 10 percent fewer manufacturing workers today than shortly before the national recession began” in December 2007, Goss said.

The state of Minnesota will release its official April employment report for manufacturing and all other sectors in the third week of May.

Nationally, manufacturers grew for an 11th consecutive month, according to a separate report Thursday from the Institute of Supply Management (ISM).

Seventeen of 18 manufacturing sectors reported growth in April, the strongest showing in months for the ISM report.

The report, which relies on surveys of supply and factory managers and owners, is the latest report to indicate that the stability and growth of the once-ailing factory sector appears to be solid. The only manufacturing area that contracted during April was nonmetallic mineral products.

The national ISM index rose to 54.9 in April from 53.7 in March, mainly because of an uptick in new orders and employment.

April’s “data is stronger than expected as the consensus was looking for an increase to 54.2,” said Jefferies money market economist Thomas Simons. “After falling 5.2 points in January 2014 to the lowest level since May 2013, the index has now risen in each of the ensuing three months. This is consistent with the story that the severe winter weather generated a drag on overall activity and that activity is bouncing back now that the spring has arrived.”

Dee DePass • 612-673-7725

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