Iowa’s economy bucked the regional trend and improved slightly during March, but the monthly Creighton University survey of supply managers in Iowa and eight other Midwestern states finds the region’s manufacturing sector slipped into recession — and has been there for a while.
Creighton economist Ernie Goss says the overall Business Conditions Index fell below growth neutral for the third time in four months.
“When it’s all said and done, that would be when the federal government revises their numbers later on this year, I think we’re going to be able to say that the manufacturing economy in the region was in a recession for all of 2023,” Goss says. “Now not a deep recession, just a dipping into negative territory for the year of 2023 and now beginning 2024.”
The index is measured on a zero-to-100 scale where 50 is considered growth neutral. Iowa’s Business Conditions Index for March improved to 51.8 from 49.3 in February. Goss says the employment situation for the region is bleak as the Midwest’s manufacturing sector lost jobs for a third straight month.
“Twenty-seven-point-three percent of supply managers reported job losses for the month and job openings were down for all nine states over the past 12 months,” Goss says. “So the job market’s definitely weakening, but overall remains okay. Now, the manufacturing numbers are not good and that’s what we’re reporting on here.”
Wholesale prices climbed to the highest level in more than a year, and the report shows March’s inflation reading is the highest since February of 2023. Goss says last week’s deadly bridge collapse that blocked the port of Baltimore, Maryland is having ripple effects well into the Midwest.
“That’s going to mean supply chain disruptions,” Goss says. “There will be more supply chain disruptions moving forward than we’ve seen in the past. Most of the survey was conducted before the disaster in Baltimore, so I expect the numbers to worsen in terms of supply chain disruptions in the weeks and months ahead.”
According to the latest month’s U.S. Bureau of Labor Statistics data, there were two job openings for every unemployed worker in Iowa, which is the same ratio recorded 12 months ago.