Manufacturers across Minnesota and the Midwest expanded for a 17th consecutive month amid swelling exports and demand for durable goods.
The nine-state Business Conditions Index, released Tuesday by Creighton University, jumped to a “robust” 64.5 in April from 62.1 in March amid increased orders, production, delivery speeds and inventory purchases.
The regional index contrasted with a slight dip seen nationally and marked the highest level reported in 12 years. The regional results included Minnesota, which saw its business conditions index rise to 63.6 from 61.0 in March amid beefed-up orders and production improvements.
Any index above 50 signals economic growth.
Ernie Goss, the report author and director of Creighton’s Economic Forecasting Group, said exports drove much of the recent regional growth, despite labor shortages and pricing inflation.
“Healthy profit growth, still low interest rates and a reduction of global trade tensions [has] pushed business confidence” across Minnesota, Iowa, Nebraska, North and South Dakota, Missouri, Kansas, Oklahoma and Arkansas, Goss said.
Economic optimism shot to 70.2 in April from 64.3 in March. Such optimism shines against a backdrop of healthy quarterly earnings now being reported by manufacturers nationwide, including Minnesota-based 3M, Polaris Industries and Ecolab.
The bright forecast, however, is not without its dim spots.
Creighton’s employment index in April dropped sharply to 48.1 from a “brisk” 58.4 in March.
“The share of supply managers reporting labor shortages continues to grow and is now limiting employment growth for the region,” Goss said. “Over the past 12 months, regional employment has expanded by 0.8 percent compared to U.S. job growth of 1.5 percent.”
In a separate report Tuesday, the Institute for Supply Management reported that a solid manufacturing index of 57.3, down from 59.3 in March. April results were “below economists expectations,” noted Bank of the West Economist Scott Anderson in an e-mail.
“This is the lowest reading on this measure since July 2017,” Anderson said. “Production, employment, inventories, imports, new export orders and new orders components all fell back in April. The drop in the production component was the largest in a year and there were more signs of inflation.
U.S. prices on raw ingredients rose for a fifth consecutive month, he said, and “the threat of trade wars and tariffs could add downside risks to factory production and increase input costs in the months ahead.”