The monthly survey of business leaders and supply managers in Iowa and eight other Midwestern states shows a moderate drop in the region’s leading economic indicator for March.
The Creighton University survey ranks the economy on a zero-to-100 scale, with 50 being growth neutral. Creighton economist Ernie Goss says it’s the tenth month in a row the region’s been above that growth neutral mark.
“The Mid-America region was still a very strong 68.9, that’s down slightly from last month’s 69.6,” Goss says, “so it’s a very, very strong reading, indicating the manufacturing sector is proceeding with very strong growth.” Iowa’s business conditions index for March also sank to 66.5, falling from 71.1 in February.
The surveys in February and March found about eight in ten manufacturers reported bottlenecks in getting raw materials and supplies from vendors, curtailing what could be even stronger growth. Goss says the impacts of COVID-19 have been long-lasting.
“In April, we hit a downturn in 2020 and since then, it’s been trending upward,” Goss says. “We’re still four-to-five-percent below pre-COVID levels. We’ve still got more to go. I expect us, by the end of the year, to be back to pre-COVID levels in terms of employment and overall economic activity.”
While more Iowans are starting to plan and take vacations, Goss says companies are not as quick to approve travel plans for their employees. “We think the vaccine is opening up the nation, and it is for consumer travel and family travel, but not for business travel,” Goss says. “Businesses are going to continue to do Zoom conferences and we’re not going to see as much as we’d like to see, so that’s going to hurt the hotel and restaurant industry, leisure and hospitality will be under pressure.”
He predicts those industries won’t recover and be back to pre-COVID levels until 2022. Compared to pre-COVID-19 levels, Goss says the U.S. Bureau of Labor Statistics shows Iowa manufacturing employment is down 3,600 jobs, or 1.6%, while average hourly manufacturing wages are 1.8% lower.