Lousy weather didn’t hold back U.S. manufacturers during the month of March, according to two widely read economic reports issued Tuesday.
A survey by Creighton University found that the business conditions index for Minnesota and eight other central states rose to 58.2 in March from 57.4 in February. Any figure above 50 signals growth, while any index below 50 signals economic contraction.
Minnesota’s index rose in March to 66.1 from 64.1, creating a 16th month of growth as manufacturers, value-added service companies and construction firms saw a bump in business. Minnesota firms saw a jump in new orders, productivity, inventories and employment.
Such business “expansions … continue to push the overall economy into a robust growth range,” said Ernie Goss, report author and the director of Creighton’s Economic Forecasting Group. “While not back to prerecession levels, construction growth has been solid despite the severe weather.”
Regionally, orders for new products surged during the month. Surveyed manufacturers also reported improved delivery lead times and a tiny increase in wages. Components of the index that slipped slightly but stayed in the “strong” category were employment, wholesale prices, business confidence and exports.
Creighton’s Mid-America Business Conditions report tracks Minnesota, South Dakota, North Dakota, Missouri, Kansas, Arkansas, Oklahoma, Iowa and Nebraska.
For the entire region, Goss found optimism was strong, pointing to gains for the next few months. “According to surveys over the past several months, the region will continue to expand employment at a solid pace,” he said. “Even with the improving job picture, supply managers expect wage growth to remain weak with an average wage expansion of 1.8 percent for the next year.”
In a separate report Tuesday, the national Institute for Supply Management (ISM) reported a small uptick for manufacturers nationwide in March. In total, 14 of 18 U.S. sectors reported growth. The overall ISM index for the entire country rose to 53.7 in March from 53.2 in February, its 10th consecutive month of growth.
U.S. industries posting the greatest gains for March included petroleum and coal, transportation equipment, furniture, paper, printing products, plastics, fabricated metal, machinery, textiles, electronics, nonmetal minerals and food and beverages.
Thomas Simons, vice president and money market economist at Jefferies LLC, said national results for May were “a bit weaker than expected as the consensus [from analysts] was looking for an [index] increase to 54.0.” However, Simons largely credited the bad weather for the restrained results and noted that “we expect activity will accelerate in the coming months and throughout the remainder of 2014.”
Simons noted that March results improved since January, when the ISM index fell to its lowest level since May 2013. Since then “the index has now risen modestly in each of the ensuring two months,” he said.