Monthly Minnesota, national manufacturing growth surges but still not at pre-pandemic activity

Midwest manufacturing growth is at the highest level in 16 years, while monthly growth at the national level is at the best level in two years.

The surveys at the national and regional level showed that the sector is expanding and adding jobs.

"Even so, current output in the regional and U.S. manufacturing sectors remains below pre-COVID-19 levels," said Creighton University economist Ernie Goss, who oversees the Midwest monthly survey. "More than three of four supply managers reported negative COVID-19 impacts."

The monthly Mid-America Business Conditions Index compiled by Creighton University found that Midwest growth was at 70.2 in October from September's already strong 65.1. Any score above 50 on the survey's index suggests growth.

Minnesota's October index was 82.7, up from 55.9 in September.

"Validating a rapidly improving state economy, U.S. Department of Labor data indicate that the state's insured unemployment rate stood at 2.3% in the second week of March, peaked at 14.9% in the second week of May, and fell to 4.2% in the third week of October," Goss said.

At the national level, the Institute for Supply Management, an association of purchasing managers, said Monday that its manufacturing index rose to a reading of 59.3 last month, up from 55.4 in September.

The gauge had fallen into recession territory from March through May as much of the country shut down in an effort to contain the coronavirus.

Of the 18 industries covered in the report, 15 reported expansion in October with strong growth in fabricated metals, food and beverages, chemicals and computers and electronics.

Timothy Fiore, chairman of the ISM manufacturing survey committee, said that manufacturing was being helped by strong demand coming out of the spring lockups in such areas as home construction and auto sales.

But economists are concerned about the country heading into widespread lockups, as it did in the spring. Many parts of Europe are already doing so because of surging infections.

"Manufacturing rebounded strongly with fewer restrictions on economic activity and stimulus efforts, but the path forward will be more difficult as the economy continues to cope with the pandemic," said Gus Faucher, chief economist at PNC Financial. "An inability of Congress to pass further fiscal stimulus is a significant downside risk."