Iowa’s economy faltered, slightly, during February, while the overall Midwestern economy gained traction and grew for the ninth straight month, according to a survey of business leaders and supply managers across the nine states.
Creighton University economist Ernie Goss says the region’s numbers for February compared to January were very strong.
“This is the highest that we’ve recorded since October of last year and it’s the second highest we’ve recorded since April of 2004,” Goss says. “The manufacturing economy, according to supply managers, is growing briskly.”
The scale goes from zero to one-hundred with a score of 50 being growth neutral. Iowa reported a 71.1 for February, down from 71.5 in January. The Midwest showed a gain of more than two points, rising from 67.3 to 69.6 over the two months.
“I have to say the trend is very strong, however we’re still not back to pre-COVID levels,” Goss says. “We’ve probably got another three to four percent growth needed before we get back to pre-COVID levels, but we will get there, assuming we have a successful rollout of the vaccine.”
Despite the slight dip in Iowa’s overall numbers, Goss says both durable and nondurable goods manufacturers in Iowa have expanded at a healthy pace since July of last year. Since bottoming out last April, the region has regained almost half of the manufacturing jobs it lost to COVID-19, but Goss says we’re still down by some 50,000 jobs.
“What’s also constraining us right now is eight out of ten supply managers indicated they had supply bottlenecks, in other words, inability or slowdown of products, inputs getting to the manufacturing company,” Goss says. “That’s one of the factors slowing growth right now, or it would be even stronger.”
Those supply bottlenecks are caused by raw material availability and price, Goss says, as well as international shipping container availability. Winter weather also caused some factory shutdowns across the Midwest during the month.
According to U.S. Bureau of Labor Statistics data, manufacturing wages for production workers in Iowa have been flat since the onset of COVID-19.