Minnesota's factories are in high gear

  • Article by: DEE DEPASS , Star Tribune
  • Updated: July 1, 2014 - 8:50 PM

Minnesota’s rating was the highest in a manufacturing survey of nine Midwest states.

A jump in exports, domestic sales and factory ­hiring pushed a key Midwest manufacturing index to the highest level in three years, bolstering confidence that a recovery in manufacturing remains robust. Minnesota had the highest rating in the nine-state survey.

Creighton University’s Mid-America Business Conditions Index rose to 60.6 in June from 60.5 in May. The solid report, released Tuesday, was a result of a surge in orders and hiring for factories pumping out appliances, machinery and other durable goods.

“This is the highest overall reading that we have recorded since March 2011,” said Ernie Goss, report author and director of Creighton’s Economic Forecasting Group. The solid results also contrasted with moderate and slowing growth nationwide.

Any index above 50 is a sign of economic expansion.

In Minnesota, factories achieved a significant accomplishment by hitting an index of 70.1 in June.

That’s up from 67.3 in May and offers further evidence that the recovery of the state’s ­manufacturing sector is cranking. New orders, production and inventory levels hit impressive gains in June, which was welcome news after a frigid spring caused only modest growth in previous months.

Minnesota far outpaced the other states that make up the “Middle America” region in June. The Creighton University report tracks manufacturing in Minnesota, North Dakota, South Dakota, Iowa, Missouri, Kansas, Arkansas, Oklahoma and Nebraska.

“There are more workers on Minnesota companies’ payroll than ever before,” Goss said. “Our surveys indicate that this expansion continues setting a new record each month.”

Goss’s one concern was China’s recent decision to reject bioengineered corn, which could hurt Minnesota long-term, especially if other nations follow China’s lead.

Factory performance in the middle of the country appeared better than the nation as a whole. In a separate report issued Tuesday, the Institute for Supply Management issued an index for the U.S. manufacturing sector that fell 0.1 percentage point to a still-healthy 55.3 in June. The index showed growth for the month for 15 of 18 manufacturing sectors, but also showed slowing in some key areas.

Leading industries for the month included furniture, food and beverage, machinery, fabricated metals and non­metallic minerals.

For all manufacturers, however, new orders rose and factory employment proved the same as in May, while production and raw-material pricing slowed during June.

“All told, U.S. manufacturing growth will certainly continue on its positive path but risks still plague the factory sector outlook,” said Cliff Waldman, senior economist for the Manufacturers Alliance for Productivity and Innovation.

“It remains clear that factory sector activity is being impeded by the persistent questions and difficulties of a sluggish U.S. economy and the numerous region-specific issues in the global business picture. These problems have been manifesting themselves in subpar performance for key manufacturing demand drivers — business equipment and exports.”

Dee DePass • 612-673-7725

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