A monthly survey of business leaders and supply managers in Iowa and 8 other Midwestern states finds an upturn in the overall business conditions index for December.
Creighton University economist Ernie Goss says trade numbers, both for exports and imports, fell significantly for the month but the leading economic indicator for the region rose for the first time since August. “It’s really a pretty good number, that’s a good reading and it’s the 25th straight month it’s been above growth neutral,” Goss says. “We’ve been dropping for three straight months so this was good news to see it bounce up there and bounce up into what I’ll call very solid territory.”
Goss says the December report points to positive economic growth for the next three to six months, although the jobs index for the region fell from November. “What we’re seeing now is the labor shortages,” Goss says. “We’re talking about an unemployment rate of 3.7% and, of course, that just means you’ve got not that many workers out there and that’s limiting growth. We could see growth being even stronger for the manufacturing sector.”
Job growth for the Midwest region is at 1.2%, versus 1.7% nationally, which Goss says is due to fewer available workers here. He says the outlook for profits in the new year remains strong, according to business leaders in the region. “We asked about profitability,” Goss says. “We asked the companies to look out there for 2019 and about 43% expect higher profits this next year and that compares to only 19% seeing lower profits.”
About 9% of respondents predicted no change in profits for the year ahead. Goss says those responses show there’s a real disconnect between what business leaders are seeing versus the poor performance of the stock market. The Creighton survey shows the Iowa-specific numbers improving in December.
Over the past 12 months, Goss says Iowa’s job market has been the strongest in the nine-state region with the state’s unemployment rate declining from 2.5 percent to 1.9 percent, as the ranks of the unemployed fell by 10,000. Goss predicts for 2019, the leading industry for Iowa will be metal producers and the lagging industry will be slaughterhouses.