Minnesota bounced back from a five-month economic slump as remodeling projects and orders for medical devices surged in December.
Overall, the state showed better economic growth than most others in the Midwest, according to the Creighton University Mid-America Business Conditions Index. Demand for medical devices grew in advance of a new 2.3 percent sales tax that takes effect this month. Minnesota also benefited from gains in remodeling and multi-home construction projects. Computer, electronics and food processing firms also held their own during the month, the report said.
Minnesota jumped to 57.2 in Creighton's index, up from 48.4 in November, signaling significant economic growth. Any index above 50 signals economic expansion; any below 50 signals contraction. The state saw expansions in new orders, production, delivery lead times, inventories and employment.
"It was surprising that Minnesota numbers were so strong," said Ernie Goss, economic forecasting director at Creighton University in Omaha. "Since the national economic recovery began in July 2009, Minnesota had added more than 9,000 manufacturing jobs. Our surveys over the past several months point to positive job and economic growth for the first half of 2013."
A separate report from the Institute for Supply Management (ISM) showed the nation's manufacturers had better-than-expected economic results for the last month of the year but had mixed views on how they would fare in 2013.
U.S. supply managers saw economic expansion in December despite hiring freezes and worries about possible fiscal cliff worries.
The national ISM manufacturing index rose to 50.7 in December from 49.5 in November, "indicating expansion in manufacturing for only the third time in the last seven months," said Bradley Holcomb, chairman of ISM's manufacturing business survey committee. "This month's reading moved manufacturing off its low point for 2012 in November."
ISM saw a jump in new orders for apparel and leather products, metals, furniture, paper goods, computers and electronics. Hiring picked up at petroleum, coal and wood businesses, printers, paper product makers, food and beverage firms, furniture and chemical plants, as well as appliance, computer and electronics firms. The surge was enough to change the U.S. economy from contraction (48.4) in November to expansion (52.7) in December.
While Minnesota and the entire nation closed the year well, the news was not so hopeful in much of the Midwest.
Creighton's nine-state Mid-America Business Conditions Index was below the "growth neutral" 50 mark in December for the fifth time in six months.
Of the nine states, only Oklahoma, North Dakota and Minnesota outperformed the nation in non-farm job growth.
By contrast, Iowa, South Dakota, Nebraska, Missouri, Kansas and Arkansas slumped comparatively despite a slight uptick in new orders and production levels. Exports proved weak, wholesale prices fell slightly and inventory levels rose, the report said.
The region posted an index of 49.5, up from 48 in November. Factory jobs continued to decline in December and the regional outlook for new jobs proved "slim," the report said.
Minnesota aside, Goss noted "job and economic growth will continue to slow for the [Mid-America] region. ... I expect slight manufacturing job losses and only small overall job additions for the region ... in the next three to six months."
He said months of surveys showed unemployment rates in all nine states declined, mostly because the jobless had left the labor force rather than continue to search for jobs.
Nationally, analysts held out hope the economy would continue to improve with Tuesday night's congressional deal.
"Now that Congress has come to an agreement that will limit 2013 tax increases and renewed the accelerated depreciation tax credit, we expect that new orders and overall activity in the sector will accelerate," wrote Ward McCarthy, Jefferies & Co. managing director and chief financial economist, in a letter to investors.
McCarthy warned that he expects "growth in the first quarter will be slow due to continued uncertainty over spending cuts and the debt ceiling. Congress has finally moved past one roadblock [the fiscal cliff], but it will encounter another one shortly [the debt ceiling]."
Dee DePass • 612-673-7725