Regional Economic Indicator Warns Of Tougher Job Market, Slower Manufacturing Growth
by June 2, 2015 9:06 am 112 views
The Creighton University Mid-America Business Conditions Index for May shows that the regional economy that includes Arkansas is pointing to positive but slow economic growth over the next three to six months.
Ernie Goss, director of Creighton University’s Economic Forecasting Group, warned that the region’s job market could experience difficult conditions in the third quarter.
“Firms linked to energy and agriculture are experiencing pullbacks in economic activity. Job growth in Oklahoma and North Dakota, two energy-producing states, have moved into negative territory,” Goss said. “Other states dependent on agriculture are also experiencing slower economic growth. That growth is likely to move even lower in the months ahead as the strong U.S. dollar slows economic activity even more.”
The monthly index developed by Creighton University is a leading economic indicator for a nine-state region stretching from North Dakota to Arkansas. In April, the index slumped to 50.4 from April’s tepid 52.7 on a scale of zero to 100.
Overall, the leading economic indicator for Arkansas in May slipped to 49.8 from 53.6 in April. Components of the index from the monthly survey of supply managers were new orders at 50.3, production or sales at 52.1, delivery lead time at 51.1, inventories at 47.6, and employment at 47.6.
“Business activity slowed for both durable and nondurable goods manufacturers in the state,” Goss said.
The Creighton University index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time. This is the same methodology used by the National Institute for Supply Management, formerly the Purchasing Management Association, since 1931.
Unlike Arvest’s consumer-focused survey, the Creighton University poll quizzes supply managers in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota to get their reading on business conditions.
One of the more surprising notes from the Creighton University survey was that employment remained in a range indicating slightly negative to stagnant job growth for manufacturing and value-added services firms in the region.
“These negative job numbers will spill over into the broader job market in the months ahead,” Goss said of the job gauge that fell to 48.3 from 49.2 in April.
This month, Goss said, supply managers were asked about the hiring situation at their firms. “Ten percent of supply managers reported an upturn in the number of applicants for each available job. On the other hand, approximately 9% of supply managers indicated the shortage of qualified workers increased from last month. The remaining 81% indicated no change in the number of applicants to open positions,” Goss said.