Manufacturers in Minnesota are still growing, but that movement slowed in August, continuing a trend that has worried economists for months.
The Creighton University Mid-America Business Conditions Index pegged Minnesota’s growth at 51.9, down from 54.8 in July. Any index above 50 indicates growth, but the August index was far less robust than the 64.7 index the state registered in February. Minnesota’s index has bobbed up and down each month since then.
Still factories in other central U.S. states did not fare as well as those in Minnesota, according to the closely watched report. The index for the nine-state region surveyed was 49.6 in August, down from 50.6 in July.
Ernie Goss, director of Creighton’s Institute for Economic Inquiry, said Minnesota’s employment levels stood out in August when compared with states such as Kansas, Nebraska, North Dakota and Oklahoma. The nine-state Mid-America region lost 9,000 manufacturing jobs since January.
Minnesota, however, enjoyed job gains during August along with Arkansas, Iowa, Missouri and South Dakota.
“According to U.S. Bureau of Labor Statistics, Minnesota’s level of manufacturing employment is virtually unchanged since January 2015,” Goss said. “Minnesota job growth in durable goods, especially metal manufacturing, offset job losses among nondurable goods producers. Our survey results over the past several months point to positive economic gains for the overall state economy for the rest of 2015, despite weakness among manufacturers.”
Minnesota supply managers reported growth in August for new orders, employment and delivery lead times, but saw setbacks with regard to sales and inventories, the survey found.
The findings of lackluster sales echoed recent reports issued by Donaldson, Valspar, 3M, Pentair and Imation.
Creighton economists found that the nine-state region — Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, Oklahoma and the Dakotas — saw weaknesses in durable goods producers including metal and energy equipment manufacturers and agricultural equipment producers.
Creighton’s survey of regional factory managers revealed that economic optimism for the next six months fell sharply to 47.7 from 52.4 in July.
“Sinking agriculture and energy commodity prices, along with global economic uncertainty, pushed supply managers’ expectations of future economic conditions lower for the month,” Goss said.
Lackluster excitement about the manufacturing sector was seen nationwide.
The Institute for Supply Management (ISM) reported Tuesday that its index of U.S. manufacturing growth fell in August to 51.1 from 52.7 in July.
“The [U.S.] August data is the lowest since May 2013,” said Thomas Simons with Jefferies.
Don Norman, a director with the Manufacturers Alliance for Productivity and Innovation Foundation, said the decline was a surprise and that he and others expected the index to reach 52.6.
“Taken together the results of the [national] ISM report suggest that overall manufacturing activity, though not declining, is merely limping along,” Norman said. “Given the headwinds faced by manufacturers, the rise in the value of the U.S. dollar, slowing growth in China, and a volatile stock market, it may be that slow growth is about the best that can be expected in the near term.”
In August six of 18 manufacturing sectors contracted, including firms that make apparel, primary metals, electrical equipment/appliances, petroleum/coal, computer products and transportation equipment.
Factories reporting growth during the month included textile mills, and manufacturers of furniture, paper, non-metallic minerals, chemicals, food/beverage, fabricated metal, plastics and machinery.