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Factory output goes into high gear

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

May 2, 2014 at 2:15AM
Bloomberg Photo Service 'Best of the Week': Students Tom Fegan, right, and Robert Conners cut a piece of aluminum for a CNC Milling class project at the manufacturing technologies lab of the Richard J. Daley College in Chicago, Illinois, U.S., on Thursday, April 24, 2014. More Americans than forecast filed applications for unemployment benefits last week as the Easter holiday period made it more difficult to adjust the data for seasonal variations. Photographer: Daniel Acker/Bloomberg *** Local
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. (Evan Ramstad — Bloomberg/The Minnesota Star Tribune)

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.

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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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Eric Watson, of Renville, Minn., drives one of his two custom-built, right off the line tractors at the AGCO North American tractor production site in Jackson, Minn., on Thursday, July 18, 2013. AGCO has implemented an expansion project to add robotic welding equipment and more workers to grow production for increasing demand. ] (ANNA REED/STAR TRIBUNE) anna.reed@startribune.com (cq)
Tractors rolled off the production line at Agco in Jackson, Minn. As the pace of manufacturing picks up, factories are increasingly busy. (The Minnesota Star Tribune)
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about the writer

about the writer

Dee DePass

Reporter

Dee DePass is an award-winning business reporter covering Minnesota small businesses for the Minnesota Star Tribune. She previously covered commercial real estate, manufacturing, the economy, workplace issues and banking.

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