Manufacturing soars in June in Minnesota and Midwest

Creighton report shows sales and exports rose in June; job growth slowed.

July 4, 2017 at 1:00AM

Growth surged for Minnesota and Midwest manufacturers in June, spurred by increased product orders both in the U.S. and overseas.

Creighton University's nine-state Mid-America Business Conditions Index, which includes Minnesota, jumped to an impressive 62.3 in June from 55.5 in May, the university said Monday. Any figure above 50 signals economic growth.

June marked the seventh consecutive month factory results grew across the region encompassing Minnesota, Iowa, Nebraska, Kansas, Missouri, South and North Dakota, Arkansas and Oklahoma.

In Minnesota, the conditions' index soared to a regional high of 68 from 58.4 in May. Minnesota supply managers reported a spike in new orders and sales plus healthy gains in employment, inventories and delivery lead times.

"Expansions were recorded for a broad range of [Minnesota] manufacturers, both durable and nondurable, including navigation equipment producers, medical equipment manufacturers and food processors," said Ernie Goss, report author and director of Creighton's Economic Forecasting Group. "Based on surveys over the past several months, the state economy will continue to grow at a healthy pace through the fourth quarter of this year."

Creighton's Minnesota and regional manufacturing results mimicked good news reported Monday for factories nationwide. In a separate report, the Institute for Supply Management reported that U.S. manufacturers saw new orders, sales, exports and deliveries rise in June. The ISM index for June rose to 57.8 from 54.9 in May.

The ISM and Creighton findings proved welcome news for manufacturers and stood in contrast to a difficult 2016. Last year, many product makers struggled as the high U.S. dollar cramped exports and several industries suffered economic downturns, including agriculture, mining, steel and oil. Several sectors are now recovering.

Across the central U.S. region, Creighton's "confidence index" rose to a "robust" 67.5 in June from 61.4 in May.

"The Federal Reserve rate hike failed to restrain business confidence," Goss said. "Strong profit growth and still-low interest rates boosted the economic outlook among supply managers in the nine-state region."

While June's report proved hopeful, it found a few notes for caution. Midwest producers of nondurable goods, especially food processors and ethanol producers, added jobs at an improving pace. But at the same time, durable goods makers in the central U.S. shed jobs, albeit at a slower pace than in previous months.

As a result, the employment index for June slipped to 60.7 from 62.3 in May. Because the index is above 50, it shows jobs are still growing.

"Total regional employment growth (year over year) is now only 1.1 percent, and well below the nation's 1.5 percent gain over the same time period," Goss said.

The ISM report noted that U.S. supply managers from across the country generally saw strong employment gains in June.

Nationwide, 15 of 18 industrial sectors reported overall growth during June. Those seeing the most growth included makers of furniture and nonmetallic mineral products, as well as paper, machinery and electrical goods.

The national ISM "index fell below 50 in August 2016, but it has been extremely resilient since then, averaging 55," said Thomas Simons, senior vice president of Jefferies LLC. "This month's reading provides more encouraging evidence that the manufacturing sector is on solid footing."

Dee DePass • 612-673-7725

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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