Midwest manufacturing expands for 16th straight month in March

New orders, trade, production provide big boost for Minnesota factories.

April 3, 2018 at 2:23PM
Thao Nguyen, an employee at Graco, works in March with tubes of carbon steel. A Creighton University report found a big jump in manufacturing activity in Minnesota for March. (JERRY HOLT/Star Tribune)
Thao Nguyen, an employee at Graco, works in March with tubes of carbon steel. A Creighton University report found a big jump in manufacturing activity in Minnesota for March. (JERRY HOLT/Star Tribune) (The Minnesota Star Tribune)

Minnesota and other Midwest manufacturers expanded for a 16th month in March, signaling that new orders, trade and other growth could continue for three to six more months.

The Creighton University nine-state Mid-America Business Conditions Index, released Monday, jumped to "a robust" 62.1 in March from 59.7 in February, and is the highest reading since June 2017, said Ernie Goss, the Creighton University economist who puts together the survey. Any index above 50 signals growth, so the survey results from Midwest producers delighted economists.

Minnesota's index also jumped to an impressive 61 in March from 57.6 in February amid new orders, higher factory production and more hiring.

In 2017, Minnesota ranked 23rd in the nation, but first in the region, in terms of the export of goods, said Goss, director of the Creighton Economic Forecasting Group.

"These exports supported approximately 144,500 jobs, directly and indirectly in the state," Goss said. "The state's new export orders [index] for March of 57.2 indicates that Minnesota exports remain strong."

The regional report — which also tracks Iowa, Nebraska, North Dakota and South Dakota, Kansas, Missouri, Oklahoma and Arkansas — found the region's export index dipped slightly in March to a still "vigorous" 63.6 index from 64.6 in February.

Goss noted that "a cheap U.S. dollar [is] making U.S. goods more competitively priced abroad."

Economic confidence slipped slightly across the nine-state region in March but remained high.

Goss said 20 percent of survey participants reported "rapidly expanding, healthy economic growth in their area while only 4 percent reported an economic downturn."

Durable goods manufacturers expanded at almost twice the pace of nondurable goods producers in March across the Midwest.

The strong regional results were welcome news in the face of uncertainty created by a potential trade war spurred by President Donald Trump instituting tariffs against China, and China taking retaliatory steps on Monday.

China is Minnesota's second- or third-largest trading partner, depending on the quarter.

While companies are concerned about the tariffs' future effects, in March, orders increased.

Nationwide, the Institute for Supply Management (ISM) reported Monday that its March manufacturing index slipped 1.5 percentage points to a still robust 59.3, amid decreases for new orders, production and employment.

Surveyed supply managers complained about inflated raw material prices, trouble finding qualified workers plus transportation woes caused by shortages of equipment and drivers.

Even so, exports remained strong due to the low U.S. dollar.

In all 17 out of 18 industries reported growth last month, led by fabricated metals. plastics and rubber, computer/electronic goods; paper and nonmetallic mineral products.

The only industry to report a decrease during March made apparel and leather goods.

Dee DePass • 612-673-7725

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Dee DePass

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Dee DePass is a business reporter covering commercial real estate for the Star Tribune. She previously covered manufacturing, the economy, workplace issues and banking.

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