A monthly measure of economic conditions in the nine-state Midwest and Plains region has slumped for the first time in five months.
The overall index in the Mid-America Business Conditions survey in July dropped to 46.1 from 50.8 in June. Any score above 50 on the survey’s indexes suggests growth, while a score below 50 suggests recession. The overall index started the year at 47 in January but had been above growth-neutral since.
“This is the lowest overall reading since the beginning of the pandemic in May 2020,” said Creighton University economist Ernie Goss, who oversees the survey.
The results “indicate that contrary to the Federal Reserve consensus, a recession in 2023 is still ‘on the table.’ On average, 45.9% of supply managers expect a recession in the second half of 2023,” Goss said.
He predicted that weak readings from surveys such as Creighton’s between now and mid-September will push the Fed to cease rate hikes at the Sept. 19-20 meeting of its interest rate setting committee.
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The survey’s regional hiring gauge slumped below growth neutral, to 45.6 from June’s 50.0.
“For some time, Creighton’s monthly survey has indicated steady employment growth and levels have been maintained due to manufacturers’ labor hoarding. However, this month’s hiring gauge is a signal of July layoffs in the region,” Goss said.
The survey’s wholesale inflation gauge plummeted to 52.2 from June’s 67.4 and May’s 74.0.
The survey’s business confidence index, which looks ahead six months, was unchanged from June’s “weak” 32.6.
“Approximately 44% of supply managers expect economic growth to decline in the next six months,” Goss said.
North Dakota’s overall business conditions index was below growth-neutral for a second straight month, at 49.5. Components were: new orders at 43.5, production or sales at 41.2, delivery lead time at 49.2, employment at 56.8 and inventories at 56.9.
North Dakota exports expanded by 29% the first five months of 2023 compared to the same time period in 2022, according to U.S. International Trade Association data. The state’s leading export, petroleum products, expanded by 68.5% from 2022 to 2023.
Survey data comes from the U.S. Bureau of Labor Statistics. The monthly survey by the Omaha, Nebraska, university covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The full report is at https://www.creighton.edu/economicoutlook/midamericaneconomy.