Iowa bucking regional trend in manufacturing job creation

Fiscal cliff, healthcare reform concerns affecting supply managers' economic outlook

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While regional manufacturing and non-manufacturing job creation was weak in November, Iowa businesses continued to buck the trend as they have so far this year.

The MidAmerica Business Conditions Index compiled by Creighton University remained below growth neutral for the fourth straight month in November. The economic indicator for the nine-state region climbed to a weak 48 from October’s 46.5.

Readings above 50 indicate a growing economy and those below 50 portend a contracting economy.

"Our survey is heavily weighted by manufacturers, and much like the national survey of supply managers, we are tracking economic weakness, particularly for non-durable goods producers," said Ernie Goss, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics.

"This weakness has more than offset slight gains from durable goods manufacturers and value-added service firms," Goss said. "Furthermore, there was a great deal of economic variation among the nine states with Iowa, North Dakota and Oklahoma outperforming the remaining states."

Iowa’s November Business Conditions Index declined for a fifth consecutive month to 52.6 from October’s 54.2. The overall index, based on a survey of supply managers in the state, has remained above growth neutral for the last 35 months.

"For 2012, Iowa has bucked the trend in the region by adding both durable and non-durable goods manufacturing jobs," Goss said. "Our recent surveys continue to point to growth for both manufacturing and non-manufacturing in the state, but at a slower pace."

Goss said recent surveys point to job growth hovering close to zero for the nine-state region in the months ahead.

"Non-durable goods producers, including food manufacturers and ethanol processors, are experiencing job losses while durable goods manufacturers are expanding their job levels, but at a slow pace," Goss said.

"As a result of the weak job market, approximately 30 percent of supply managers expect no pay raise next year. On average, supply managers project a 1.4 percent wage gain for the next year."

Economic optimism about the future, as captured by the November business confidence index, plummeted to 43.5 from October’s 58.

"Both the fiscal cliff and the uncertainty surrounding healthcare reform were reported by supply managers as negatively affecting their economic outlook," Goss said.

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