Manufacturers around the country continued to grow in November, but at a slightly slower pace as oil and crop prices declined.
Creighton University's manufacturing index for companies in Minnesota and nine other central states dipped to a still strong index of 51.3 in November from 51.8 in October. Any index above 50 signals growth, while readings below 50 signal contraction.
The Institute of Supply Management (ISM) reported Monday that its U.S. manufacturing index dipped to 58.7 from 59 in October. Fourteen of 18 manufacturing industries grew with food, beverage, furniture, metal products, textiles and printing topping the list.
Monday's reports attributed the slight slowdown to lower oil prices, depressed crop prices and sagging demand for Midwest agricultural equipment. Recently John Deere and Caterpillar noted pressures on ag-related sales.
The Creighton report noted that new orders across all factories slid during November and that employment fell for the third time in four months as weakness in the ag and energy sectors has become more prevalent across the middle of the United States.
At the same time, exports grew and inventories and economic optimism rose during November as surveyed factory managers said they expected a solid holiday season.
Ernie Goss, director of Creighton University's Economic Forecasting Group, said that "After rising to its highest level in more than three years in June, the overall [51.3 index] reading has hovered in a range pointing to positive." But it also has signaled "much slower growth for the overall regional economy over the next three to six months."
In Minnesota, the business conditions index fell to 58 from October's 63.7. The state's factories continued to see strong growth in new orders, production, deliveries and inventories. Their Achilles' heel, however, was jobs.
Minnesota's manufacturing sector lost 31,000 jobs during the recession that ran from December 2007 to June 2009. It only has regained 20,000 jobs, Goss said. "The state's manufacturing employment will return to prerecession levels in the latter half of 2015."
The ISM index "matched the August reading [and] was the highest level since March 2011," said Jefferies LLC Vice President Thomas Simons in a research note to investors. "The data is a bit stronger than expected. … Respondents in many of the industries highlighted in the ISM news release noted a general sense of optimism and of strong business activity."
Daniel Meckstroth, chief economist for the Manufacturers Alliance Foundation called the national results "exceptionally strong," and noted that "only 7 percent of the time in the last 25 years has the [production manufacturing index] been at 58.7 percent or higher."
Of the 18 manufacturing industries, 14 are reporting growth in November in the following order: Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Furniture & Related Products; Fabricated Metal Products; Textile Mills; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Paper Products; Plastics & Rubber Products; Machinery; Transportation Equipment; Nonmetallic Mineral Products; Petroleum & Coal Products; and Primary Metals.