Ernie Goss. (Creighton photo)
The monthly survey of business leaders in Iowa and eight other Midwestern states shows the regional economy is still growing, but slowly.
Creighton University economist Ernie Goss says June was the fifth straight month where the overall business conditions index was above growth neutral, or 50 on a scale of zero to 100. “We asked the supply managers about the threats to their company and to the economy, and number one, of course, they’re supply managers, and they see supply chain disruptions as a major threat to their business, while three out of ten named labor shortages. So even though the economy is slowing down, businesses out there are still seeing labor availability being a real challenge.”
Only one in five employers surveyed reported job gains during June, as Goss says “labor hoarding” remains rampant across the region. “Even though the labor availability is not good, companies are continuing to not lay off workers, maintaining workers,” Goss says. “Of course, what does that mean? Lower labor productivity, the big, big challenge, the biggest challenge to the overall U.S. economy which is underreported, the worst labor productivity we’ve seen since 1947.”
High inflation rates have been a consistent concern in recent months, but Goss says all signs are pointing to inflation finally leveling off. “Supply managers expect prices to grow by seven-tenths of one-percent over the next six months,” Goss says. “Of course, that’s very low inflationary pressure, so the Fed is getting their way. They’ve been raising interest rates to slow down inflationary pressures, and that’s certainly happening.”
Iowa’s overall business conditions index rose from 51.9 in May to 55.4 in June, mirroring the region’s steady but slow growth. According to data from the U.S. International Trade Association, Iowa expanded exports by 10.6% for the first four months of this year, compared to the same time-period last year, with machinery equipment export growth of 41.6% leading the way.