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Flat wages in manufacturing cause Iowa’s economy to dip in February


Iowa’s economy declined slightly in February as wages in manufacturing remained stagnant, according to a survey of supply managers released this week.

According to Creighton University’s Mid-America Business Conditions Index, Iowa’s index fell to 71.1 in February, down from 71.5 in January. Despite the dip, the state’s economy remained well into growth territory.

The index, a monthly survey of supply chain managers in nine states, is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time. It ranges between zero and 100 with an index of greater than 50 indicating an expanding economy over the next three to six months.

“Since July of last year, both durable and nondurable goods manufacturers in Iowa have expanded at a healthy pace,” said Ernie Goss, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business. “However, according to U.S. Bureau of Labor Statistics data, manufacturing wages for production workers in the state have been flat since the onset of COVID-19.”

For the region, the index climbed to 69.6, up from 67.3 in January. According to the survey, manufacturing activity is surging, only restrained by constraints on supplies and labor.

Eight in 10 supply managers surveyed reported that they were experiencing bottlenecks in receiving raw materials and supplies from vendors. Those constraints were curtailing what would be even strong growth, they said.

Components of the overall February index were: new orders at 80.2, production or sales at 68.9, delivery lead time at 78.4, employment at 68.8, and inventories at 68.4.

“Since bottoming out in April, the region has regained almost one-half of the manufacturing jobs lost to COVID-19,” Goss said. “Even so, the regional manufacturing level is currently down by approximately 50,000 jobs, or 3.5%. Creighton’s monthly survey results indicate that the region is adding jobs and economic activity at a healthy pace, and that growth will remain healthy for the first half of 2021.”

Other highlights from the report include:

  • The wholesale inflation gauge soared to a record high.
  • Shipping and transportation delays were named as the top issue accounting for supply bottlenecks.
  • A weak dollar bolstered new export orders.
  • According to U.S. Bureau of Labor Statistics data, manufacturing wages for production workers in the region expanded by 3.6% since the onset of COVID-19 in March 2020.

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