Report: Arkansas’ economy declines in May but above growth neutral

Arkansas’ economic conditions declined slightly in May compared to April, but remained in a growth trend despite continued job losses in the manufacturing sector, according to the Creighton University Mid-America Business Conditions Index.

The overall index for the nine-state region that stretches from Arkansas to Minnesota was 54.4 in May, below the 56 in April but “above growth neutral” for the fourth consecutive month. An index number above 50 indicates economic growth.

The May employment index sank to 47.0 from 50.2 in April and 50.7 in March. The region lost manufacturing jobs for the 10th time in the past 12 months. Iowa, Missouri and Nebraska accounted for approximately 83.3% of the manufacturing jobs lost in the past 12 months, according to the index report posted Monday (June 1).

“Creighton’s latest survey indicates that the regional manufacturing sector continues to improve, albeit slowly, with manufacturing job losses for the month and escalating wholesale inflation,” Dr. Ernie Goss, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business, said in the report.

The index also found that the May price gauge climbed to its highest level in almost four years, which the report suggested will reduce the likelihood of a Federal Reserve rate cut in 2026. Also, approximately, 81% of supply managers surveyed for the report indicated that the Iran War was putting upward pressure on input prices. As reported by one supply manager in May, “expect even further inflation if the Iran conflict is not resolved shortly.”

Trade, both exports and imports, pulled back for May. Economic optimism, as captured by the May Business Confidence Index, increased to a weak 42.3 from 36.7 in April.

“I expect rising energy prices, along with supply chain disruptions, to push the confidence index even lower in the coming months,” Goss said.

Arkansas’ May index was 53.9, down from 56 in April. Most key components of the index were in growth territory. Components from the May survey of supply managers were: new orders at 54.6; production at 54.5; delivery lead time at 63.1; inventories at 51.6; and employment at 46.6.

The Creighton Economic Forecasting Group has conducted the monthly survey of supply managers in nine states since 1994 to produce leading economic indicators of the mid-America economy. States included in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.