Supply chain disruptions, labor shortages top concerns as Iowa’s economy slows in September
Iowa’s economy slowed in September, following a larger regional trend of slowing manufacturing activity, according to a survey of supply chain managers released this week.
Creighton University’s MidAmerica Business Conditions Index showed that the index score for Iowa fell to 50.9 in September, down from 55.7 in August, marking the sixth consecutive monthly decline in Iowa’s index score after jumping to 75.6 in March.
The Business Conditions Index ranges from zero to 100 with a score of 50 representing neutral growth for the next six months.
The overall score for the nine-state region, including Iowa, also fell in September to 52.7, down from 55.5 in August, the fifth decline in the past six months and the lowest reading since June 2020.
Ongoing supply chain disruptions and labor shortages continued to top the list of concerns for supply chain managers in the fourth quarter of 2022, with many managers expecting holiday economic activity to be flat, the report showed.
High inflation and elevated interest rates were also among concerns identified in the September report.
In Iowa, individual components of the survey, new orders declined with a score of 45.8, down from 57.3 the prior month. The score of production or sales sank to 43.3, down from 56.1 in August, and delivery lead times fell to 53.3, down from August’s score of 58.8
The index scores for employment were up slightly to 49.4, up from 49 in August, and inventories rose to 62.4, up from 57.2 the prior month.
Regionally, the employment index grew slightly to 51.9, up one-tenth of a point from August, and the wholesale inflation gauge declined to 71.2, down from 76 in August and its lowest reading since August 2020.
“As oil prices have stabilized at a lower level, so has inflation. Even so, I expect the Federal Reserve to announce an interest rate hike of 50 basis points (0.50%) to combat inflation at its Nov. 1-2 meetings,” said Ernie Goss, director of Creighton University’s Economic Forecasting Group.
The regional score for inventories jumped to 65.5 in September as companies stockpile inventories to fight supply chain disruptions, Goss said.
The trade index score for exports increased slightly to 44.5, but remained well below neutral growth in September because of supply chain disruptions and a strong dollar, the report stated. The import score also fell, but remained above growth neutral because of manufacturing expansion.
Confidence fell to 25.9, down several points from August, continuing what Goss said was the “worst string of readings since the 2008-09 recession.”