Manufacturing in Minnesota continued to grow in February, but not at the pace of states such as South Dakota, Iowa and Kansas.
The growth comes despite trade and hiring woes reported by factory managers to Creighton University’s Economic Forecasting Group, which produces the Mid-America Business Conditions Index.
The Mid-America index climbed from 56 in January to 57.9 in February, marking the 27th straight month of growth in the nine-state region.
In Minnesota, the index still showed growth at 53.4, but it was down from 54.5 in January. Any index above 50 signals economic expansion.
The key reason for Minnesota’s slowed growth was that the factory sales index for the state was only 49.4, showing a slight contraction.
“The regional economy continues to expand at a positive pace. However, as in recent months, shortages of skilled workers and international trade tension/tariffs remain an impediment to even stronger growth,” said Ernie Goss, director of Creighton’s Economic Forecasting Group.
Slightly under half of factory managers surveyed said new trade tariffs by President Donald Trump’s administration and uncertainty about trade talks with China had made it harder to purchase goods from international suppliers.
About one-fourth of supply managers supported raising tariffs even more on Chinese goods, and an almost equal number said they should be reduced.
The issue is ripe in Minnesota — and a factor in the slowed growth.
Factories in Minnesota exported an estimated $1.9 billion in goods to China in 2018, making it the No. 1 such exporter in the nine-state region.
“The exports to China supported approximately 19,000 jobs in Minnesota for 2018,” Goss said.
Minnesota is home to several multinational corporations that produce goods around the world, including China.
3M Co., Donaldson Company, Graco Inc., Pentair and Polaris Industries all have factories overseas and have a keen interest in seeing the U.S. trade and tariffs situation resolved.
Nearly all have increased product prices in response to trade wars they say disrupted supply chains and boosted the cost of supplies for the past year.
In February, factories across the region reported upticks in new orders, delivery speeds, hiring and exports.
Wholesale inflation still showed strong growth but the rate of growth slowed from an aggressive index of 76 to 64 in February.
Confidence levels for the entire region jumped, reaching an index of 58.8 from 53.7 in January.
States tracked include Minnesota, Iowa, Missouri, Kansas, Nebraska, North Dakota, South Dakota, Oklahoma, and Arkansas.
Regional results proved stronger than the national stage. In a separate report issued Friday, the Institute for Supply Management reported that U.S. factories grew but at a slower pace.
U.S. indexes for new orders, production, employment, prices and supply deliveries showed growth, but all decreased slightly during February to produce an overall index of 54.2. That is down from 56.6 in January.
Sixteen of 18 manufacturing industries grew during the month, with printing, textiles, computers and electronic goods leading the pack.