Manufacturing conditions positive despite job losses, inflation

The manufacturing economy expanded last month despite high inflation and continued job losses, according to Creighton University’s June Mid-America Business Conditions Index..The index increased to 56.0 from 54.4 in May, its fifth straight month of being higher than the growth-neutral mark of 50. Creighton Professor of Economics Ernie Goss said the numbers are consistent with 2 to 3 percent inflation-adjusted GDP growth. “We are heading in the right direction,” he added. GDP continues to outperform the labor market, Goss noted. U.S. GDP increased 2.1 percent in the first quarter of this year, while the labor market saw moderate gains, according to the Bureau of Labor Statistics. Construction of data centers is pushing up investments, Goss said, while imports have been significantly reduced. The imports index fell to 44.1 from 45.9. The index tracking exports remained essentially unchanged at 47.3. The hiring index increased to 49.8 from 47.0 in May. The regional manufacturing sector has shed 47,000 jobs over the past 12 months. Regional food processing companies lost 8,000 jobs during that time, Goss said, with two food processing facilities closing in Nebraska. Of manufacturing companies looking to hire, 36 percent reported not having enough qualified applicants, while 29 percent listed compensation and benefits as a complication. The inflation index fell to 78.3 from 81.7 in May, which Goss attributed to increased supply chain pressure and disruptions from the Iran War. Inflation is outpacing wage gains, Goss said, which he predicted could lead to problems for Republicans in the Midterm elections. Thirty-six percent of manufacturers reported passing all cost increases to customers, while 50 percent said less than half. Goss does not expect the Federal Open Market Committee to change interest rates in its next two meetings, but does anticipate a rate cut by the end of the year as inflation falls and the economy slows.