Midwest business conditions improve

A monthly survey of supply managers in the Midwest has found improving conditions with manufacturing showing signs of a rebound.

Creighton University's Mid-America Business Conditions Index increased to 52.1 in May, up from April's 50.1 and 50.6 in March. The index ranges between zero and 100, with a reading greater than 50 indicating an expanding economy over the course of the next three to six months.

'The region's manufacturing sector is expanding, but at a slow pace as gains for nondurable goods producers more than offset continuing losses for regional durable goods manufacturers,” said Ernie Goss, director of Creighton's Economic Forecasting Group, in a news release.

'One of the keys to the level of economic growth in the months ahead will be the interest rate position of the Federal Reserve. If the Federal Reserve telegraphs more aggressive rate hikes in the months ahead at its June meetings, the U.S. dollar is very likely to strengthen, slowing regional manufacturing.”

For the first time since August 2015, the regional employment gauge advanced above growth neutral. The index climbed to 51.4 from April's 45.

Twenty-six percent of the supply managers said difficulty finding and hiring qualified workers is the biggest threat to business operations for the remainder of 2016.

New export orders fell to 52.1 from April's strong 57.6. The import index for May tumbled to 50.1 from 58.0 in April.

'Recent economic improvements among the region's key trading partners assisted exports for the month. At the same time, growth in regional manufacturing pushed supply managers to maintain buying from abroad,” Goss said.

Iowa's May Business Conditions Index advanced to 53.2 from April's 50.1.

'In 2015, Iowa ranked fifth in the nine-state region with exports per manufacturing worker of $61,000,” Goss said. 'A 6.2 percent decline in exports over the past two years contributed to the state's recent slower economic growth.”