Mid-America Manufacturing Economy Begins Year on Positive Note

January 2025 Survey Highlights:
-For only the third time since July 2024, the overall, or Business Conditions Index, climbed above growth neutral.
-For a fourth straight month, the wholesale price inflation gauge rose but continues to indicate modest inflation.
-Due to modest inflationary pressures, Goss expects the Federal Reserve to hold on any interest rate change at its next meeting on March 18-19. 
-After 12 straight months of job losses, the region’s employment gauge climbed above growth neutral.
-In anticipation of higher costs from tariff implementation, firms increased their inventory levels in January and increased imports to a record high.
-According to the latest U.S. International Trade Administration data, the regional economy expanded 2024 year-to-date manufacturing exports by $797.2 million from the same period in 2023 for a 0.9% gain.
-Mexico was the top 2024 destination for regional agriculture and livestock exports.
 
OMAHA, Neb. (February 3, 2025) — After seven readings below growth neutral in 2024, the Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, began the year with an index above the 50.0 growth neutral threshold.

Overall Index: The Business Conditions Index, which uses the identical methodology as the national Institute for Supply Management (ISM) and ranges between 0 and 100 with 50.0 representing growth neutral, climbed to 51.1 from 48.7 in December. The index has vacillated slightly above and below growth neutral every month in 2024 and also during the first month of 2025.

“January job gains for manufacturers in the nation are encouraging after the nation and region shed 93,000 and 7,900 jobs, respectively, in 2024. I remain concerned about the recently implemented tariffs, which I expect to result in job losses due to retaliation from U.S. trading partners,” said Ernie Goss, PhD, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.

The Mid-America report is produced independently of the national ISM.

Employment: For the first time since December 2023, the employment gauge climbed above growth neutral in January. The January employment index improved to 51.1 from December’s 46.4. Despite weak manufacturing employment readings over the past year, approximately one in five firms reported labor shortages.

Approximately 31.8% of supply managers expect artificial intelligence (AI) to have a positive impact on their company this year and in the years ahead.

More than seven of 10 supply managers indicated concern regarding President Trump’s tariffs. Comments from supply managers in January indicated the potential for negative impacts from tariffs. 

Comments from supply managers in January:

“We have ‘on shored’ our production from Germany to Nebraska over the past years and purchase materials from domestic sources.”
“We The People end up paying for these tariffs. I would tell people to follow the money.  Where does the tariff money go?”
“President Trump is a very, very aggressive, unpredictable negotiator. He will make and correct negotiation mistakes. It is difficult to forecast in this environment.”
I believe President Trump's political posturing is to see what his opponents’ (and the public’s) reaction will be to these announcements before making a determination on which actions he will take. Doing this will minimize or possibly eliminate any needed actions but we prepare for the worst and hope for the best!”
“The Biden Administration already set the course (no turning back) for higher costs due to their frivolous spending spree for far-left disillusioned ideologies that we will be paying, for generations to come!” 
“We are waiting for the new administration's tariff announcements in order to make adjustments to our business plan.”
“I hope my euphoria is not a broken dream! Very interested on how the next 100 days evolve and the direction established AND COLLABORATION ON COMMON SENSE!”
“I understand the tariff increase but it is possibly going to cost us all.”
 
Wholesale Prices: The January price gauge rose to 62.0, its highest level since May 2024, and up from 57.1 in December. “The regional inflation yardstick has clearly moved into a range indicating inflationary pressures are still modest but moving higher. As a result, I expect the Fed to leave interest rates unchanged at its March 18-19 meetings,” said Goss.

Confidence: Looking ahead six months, economic optimism, as captured by the January Business Confidence Index, soared to 61.4 from December’s 52.8. “Approximately half of supply managers expect improving business conditions over the next six months,” said Goss.

Inventories: The regional inventory index, reflecting levels of raw materials and supplies, rose to 52.8 from 49.1 in December. “In anticipation of higher costs from tariff implementation, firms increased their inventory levels in January,” said Goss. 

Trade: The relatively strong dollar continues to make U.S. goods less competitively priced abroad and pushed the export index further below growth neutral to 41.7 from December’s 45.8. Concerns over tariffs drove the import index to a record high of 67.5 from December’s 42.1.

According to the latest U.S. International Trade Administration data, the regional economy expanded 2024 year-to-date manufacturing exports by $797.2 million from the same period in 2023 for a 0.9% gain.

Other survey components of the January Business Conditions Index were: new orders increased to 49.0 from 47.6 in December; the production or sales index fell to 46.7 from December’s 47.1; and the speed of deliveries of raw materials and supplies expanded to 55.7 from December’s 53.3. This upturn indicates supply chain disruptions and delivery bottlenecks rose for the month.

The Creighton Economic Forecasting Group has conducted the monthly survey of supply managers in nine states since 1994 to produce leading economic indicators of the Mid-America economy. States included in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Below are the state reports:

Arkansas: The state’s January Business Conditions Index climbed to 50.2 from 46.1 in December. Components from the January survey of supply managers were: new orders at 48.5; production or sales at 46.7; delivery lead time at 54.6; inventories at 51.0; and employment at 50.4. According to the latest U.S. International Trade Administration data, Arkansas expanded 2024 year-to-date manufacturing exports by $355.1 million from the same period in 2023 for a 6.9% gain.

Iowa: The state’s Business Conditions Index for January increased to a regional low of 43.1 from December’s 40.8. Components of the overall January index were: new orders at 46.9; production or sales at 43.9; delivery lead time at 46.3; employment at 35.1; and inventories at 43.0. According to the latest U.S. International Trade Administration data, Iowa experienced a $1.5 billion drop in 2024 year-to-date manufacturing exports compared to the same period in 2023 for a 9.6% decline.

Kansas: The Kansas Business Conditions Index for January expanded to 49.6 from December’s 46.3. Components of the leading economic indicators from the monthly survey of supply managers for January were: new orders at 48.4; production or sales at 46.5; delivery lead time at 53.8; employment at 49.0; and inventories at 50.2. According to the latest U.S. International Trade Administration data, Kansas expanded 2024 year-to-date manufacturing exports by $286.3 million from the same period in 2023 for a 2.6% gain.

Minnesota: The January Business Conditions Index for Minnesota advanced to 53.3 from December’s 51.4. Components of the overall January index were: new orders at 49.2; production or sales at 47.9; delivery lead time at 58.1; inventories at 54.3; and employment at 56.9. According to the latest U.S. International Trade Administration data, Minnesota expanded 2024 year-to-date manufacturing exports by $2.2 billion from the same period in 2023 for a 10.8% gain.

Missouri: The state’s January Business Conditions Index rose to 50.2 from 47.1 in December. Components of the overall index from the survey of supply managers for January were: new orders at 48.5; production or sales at 46.7; delivery lead time at 54.5; inventories at 50.9; and employment at 50.3. According to the latest U.S. International Trade Administration data, Missouri expanded 2024 year-to-date manufacturing exports by $1.4 billion from the same period in 2023 for a 9.4% gain.

Nebraska: For the eighth straight month, Nebraska’s overall index rose above growth neutral. The state’s January Business Conditions Index stood at a regional high 58.1, but was down from 58.6 in December, also a regional high. Components of the index from the monthly survey of supply managers for January were: new orders at 47.4; production or sales at 52.1; delivery lead time at 60.9; inventories at 66.0; and employment at 66.7. According to the latest U.S. International Trade Administration data, Nebraska expanded 2024 year-to-date manufacturing exports by $158.9 million from the same period in 2023 for a 3.0% gain.

North Dakota: The state’s overall, or Business Conditions, index advanced above growth neutral for a sixth consecutive month to 53.3 from 51.8 in December. Components of the overall index for January were: new orders at 49.2; production or sales at 47.9; delivery lead time at 58.1; employment at 56.9; and inventories at 58.1. According to the latest U.S. International Trade Administration data, North Dakota experienced a drop in 2024 year-to-date manufacturing exports of $3.1 billion from the same period in 2023 for a 48.2% decline.

Oklahoma: The state’s Business Conditions Index for January climbed to 54.4 from 52.7 in December. Components of the overall January index were: new orders at 49.4; production or sales at 48.3; delivery lead time at 59.3; inventories at 55.5; and employment at 59.1. According to the latest U.S. International Trade Administration data, Oklahoma expanded 2024 year-to-date manufacturing exports by $1.3 billion from the same period in 2023 for a 22.7% gain.

South Dakota: The January Business Conditions Index for South Dakota jumped to 50.2 from December’s 46.5. Components of the overall January index were: new orders at 48.5; production or sales at 46.7; delivery lead time at 54.6; inventories at 50.9; and employment at 50.3. According to the latest U.S. International Trade Administration data, South Dakota experienced a 2024 year-to-date decline in manufacturing exports by $251.7 million from the same period in 2023 for a decline of 12.4%.

Survey results for the month of February will be released on March 3, 2025, the first business day of the month.