The Midwest region saw more signs of an economic slowdown during October, according to a survey of business managers in Iowa and eight other states.
Creighton University economist Ernie Goss says the region’s manufacturing sector is clearly slipping and the numbers continue to worsen.
“The overall index moved below growth neutral for the fourth straight month,” Goss says. “The index ranges between zero and 100 and 50 is growth neutral, so anything below growth neutral is not good. The overall index decreased to 43.8 from September’s 45.5.”
Iowa’s picture is improving, slowly. The October Business Conditions Index for Iowa is still below growth neutral but rose slightly, Goss says, to a “frail” 48.9 from September’s 48.0.
“Is it a recession? No, it’s not, but it is negative for manufacturing,” Goss says. “Is it going to spill over into the broader economy? It is spilling over in terms of slower growth for the overall economy and negative growth for the manufacturing economy.”
Even with low oil prices, Goss says weakness among manufacturers linked to agriculture and energy continue to weigh on regional economic conditions. “Over the last 12 months, the region’s lost 19,100 manufacturing jobs,” Goss says. “That’s a negative 1.4% decline in manufacturing jobs. At the same time, the nine-state region has gained 104,000 non-manufacturing jobs, that’s 1% growth.”
Due to the heavy dependence of the region on the ag and energy sectors, Goss says he expects the regional economy to continue to underperform the national economy. Specifically for Iowa, Goss says metal producers and machinery manufacturers experienced downturns in economic activity during the month, while food processors recorded cutbacks in business activity.