Economic confidence plummeted in May

Supply manager economic confidence fell in May even as solid business conditions continue, according to Creighton University's monthly regional Business Conditions Index. .Economic optimism for the next six months fell from an already weak 33.4 in April to 21.7 in May. According to the report, more than 60 percent of survey participants expected the economy to worsen in the next six months. More than two-thirds of supply managers anticipate supply chain disruptions will pose the greatest threat for the rest of the year. .The BCI, which ranges from 0 to 100, fell from nearly 66 in April to 60 last month, the 24th straight month that the reading has been above growth-neutral. . "Creighton's monthly survey results indicate the region continues to add manufacturing activity at a solid pace, but with significant, and rising inflationary pressures," said Ernie Goss, director of Creighton's Economic Forecasting Group. .The employment index remained above growth-neutral but still fell nine points to 53. According to the report, regional manufacturers have only added jobs at a modest pace despite solid economic activity for nearly two years. On average, supply managers expected prices for supplies and raw materials to spike by 8.7 percent over the next six months, according to the report. .The survey continues tracking record high inflation readings: The U.S. Bureau of Labor Statistics reported that commodity prices have increased by approximately 21.5 percent over the last 12 months with farm prices soaring by 34.4 percent. The price of metal products has increased by 24.8 percent, and fuels by nearly 50 percent. .According to the report, regional trade numbers were positive in May, despite supply chain bottlenecks. The new export orders index increased two points to 63, while the regional import reading fell 12 points to 47. A higher reading indicates more supply chain disruptions and delays. .Goss expects the Federal Open Market Committee to hike interest rates by one-half of one percentage point both this month and in July. .The survey covers a nine-straight region including Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota. Of the nine states, the BCI only increased in Oklahoma and South Dakota.