Iowa’s economy continued to improve in September behind strengthening employment and production, according to the Mid American Business Conditions Index released this week.

According to the report, released by Creighton University, Iowa’s Business Conditions Index rose to 67.1, up from 56.4 in August. For the region, the index has increased five consecutive months to 65.1, up from 60 in August, and to its highest level since May 2018. It also marked the fourth straight month above neutral growth.

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

Ernie Goss, Ph.D. and director of Creighton’s Economic Forecasting Group, said despite improvements, the manufacturing sector remains below pre-COVID-19 levels.

“Creighton’s monthly survey results have mirrored the national manufacturing survey results indicating that the manufacturing sector has been expanding at a solid pace since sinking to a post-2008 recession low in April,” Goss said in the report. “Even so, current output in the regional and U.S. manufacturing sectors remains well below pre-COVID-19 levels.”

In Iowa, Goss said improved employment helped push the index higher in September.

“Validating a rapidly improving state economy, U.S. Department of Labor data indicate that the state’s insured unemployment rate stood at 1.7% in the second week of March, peaked at 12.4% in the first week of May, and fell to 4.3% in the first week of September,” he said.

According to the report, indexes for new orders in Iowa stood at 80 in September, with production or sales measuring 70.5, employment at 67,4, inventories at 64.8 and delivery lead time at 65.7.
Despite improvement, worker shortages were reported by 40% of supply managers in the nine-state region, the report showed.

Highlights from the September report include:

• The regional Business Conditions Index expanded to its highest level in more than two years.
• The regional employment index climbed to its highest level since June 2019.
• Four of five supply managers reported their firms were experiencing difficulty hiring qualified workers.
• Approximately 62.9% of supply managers reported shipping bottlenecks and difficulties in receiving materials and transporting output.
• Business confidence remains healthy.