Midwest manufacturing slows

Factories in America's heartland saw their growth stall in December, while increased production and new orders fueled gains for manufacturing activity for the nation as a whole.

Two widely read benchmarks of business conditions released Tuesday offered different views of the manufacturing sector, but shared one significant conclusion: Employers remain cautious about hiring more workers.

A survey of the mid-America region by Creighton University saw no growth in its employment index for the fifth straight month in December. Prof. Ernie Goss, who compiles the study, said hiring probably won't begin to perk up until the second half of this year.

The other study, a nationwide survey by the Institute for Supply Management (ISM), saw its employment index increase in December compared with November while remaining considerably lower than the first half of 2011. Only 23 percent of the respondents in December said they had increased hiring during the month. Nearly 20 percent said they had trimmed their workforces.

The ISM study, which is based on interviews with hundreds of businesses nationwide, saw its December index rise to 53.9 vs. 52.7 in November. A reading above 50 indicates growth. Bradley Holcomb, chairman of the ISM's survey committee, said that with new orders up and prices of raw materials down, "manufacturing is finishing out the year on a positive note."

Goss attributed the decline in his regional study to the weaker farm economy, which previously has supported growth in agricultural-related manufacturing. The overall index in his study fell to 50.0 in December compared with 52.6 in November. A reading above 50 signals growth.

"While the reading is well above ... 2008 and early 2009, our surveys over the past several months indicate that slowdowns in the national and global economies are putting downward pressure on the regional economy," he said.

Upbeat on exports

Exports were one of the few bright spots in the Creighton study and also showed healthy growth in the ISM survey.

"I expect exports to continue to grow, but modestly, with economic repercussions out of Europe as a key headwind," said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit.

Goss said he was surprised to see that despite the weak results in December the "confidence index," which measures respondents' outlook for the next six months, posted a strong increase.

"It is clear that news reports of improving U.S. economic conditions is having a positive impact on the business outlook among supply manages even with the problems surrounding Europe," he said.