Survey of supply chain managers suggests expanding economy despite concerns about Russian invasion
Iowa’s economy grew in February despite confidence sinking to its lowest level on record because of concerns following the Russian invasion of Ukraine, according to a survey of supply chain managers in a nine-state region.
According to Creighton University’s Mid-American Business Conditions Index, the index for Iowa increased to 60.6 last month, from 56.7 in January.
The index ranges from zero to 100, with an index score of 50 representing neutral growth. It is a mathematical average of indexes for new orders, production or sales, employment, inventories, and delivery lead time. An index greater than 50 indicates an expanding economy over the next three to six months.
In Iowa, most components of the survey saw scores over 50.
The index for new orders was 64.5, production or sales was 64.6, delivery lead time was 76.4, and the index for employment was 51.8. Only the index for inventories dropped below neutral growth at 45.7.
According to the survey, nondurable goods manufacturers have expanded at a solid pace, but durable goods producers have experienced pullbacks in activity.
For the region as a whole, the index increased to 64, from 56.2 in January.
“Creighton’s monthly survey results indicate the region continues to add manufacturing activity at a healthy pace, but with only modest job additions,” said Ernie Goss, director of Creighton’s Economic Forecasting Group. “The Russian invasion into Ukraine will lengthen supply chain disruptions and push commodity prices upward. Interruptions in trade flows will also weaken the regional recovery, which was already slowing significantly,”
Those concerns about the Russian invasion of Ukraine sent the confidence index tumbling to its lowest level since the survey began in 1994, sinking to 19.5, down from an already weak 36.2 in January.
“Concerns about the impacts of the Russia-Ukraine war, higher interest rates, soaring inflation, and supply chain disruptions combined to hammer business confidence,” Goss said.
The survey also found that 43.5% of supply chain managers listed supply chain disruptions as a top challenge in the next six months. More than one-third said finding and hiring qualified workers was a top concern, and 17.4% said rising input costs was a top challenge.
A surprise in the survey results was that the employment index increased to 56.6, from 43.6 in January, despite worries about the labor shortage.
“On average, supply managers projected a modest 3% growth,” Goss said. “Given the shortage of workers, this restrained increase is surprising.”
Other findings from the report:
- The wholesale price index fell to a still strong 80.5, down from 87.5 in January.
- The inventory index, reflecting raw materials and supplies, fell to 52.4, down from 59.7 the prior month.
- The trade index fell to a growth-neutral score of 50, down nearly 7 points from January. The import index fell to 43.3, down from 50 in January.
- New orders increased to 65, from 51.7 in January.
- Production or sales jumped to 66.7, up from 48.3.