The Midwestern manufacturing economy weakened but remained positive last month, according to Creighton University. .May’s Mid-America Business Conditions Index decreased to 54.4 from 56.0. Any reading higher than 50 indicates positive sentiments. Trade numbers are still relatively low, with the import index up to 45.9 from 44.6 in April, noted Ernie Goss, director of Creighton Economic Forecasting Group. The index tracking exports fell to 47.4 from 49.9, despite three of four expecting no supply chain disruptions from the war in Iran. One of four were front-running purchases. GDP and the labor market are weakening, according to the report. Q1 GDP increased 1.6 percent, less than its 2.1 percent rise in 2025, Goss added. The hiring index dropped to 47.0 from 50.2 in May, after two months of above growth-neutral readings. Few firms reported layoffs, and three of four experienced usual hiring. Manufacturing is down 70,000-80,000 jobs over the past 12 months, Goss said, with regional manufacturing down 1.2 percent or 17,000 positions. The employment drop is attributed to higher material costs, changing consumer demand and the long-term shift toward automation.Goss does not expect the Federal Open Market Committee will cut interest rates during its meeting later this month. The inflation index increased to 81.7 from 75.6 in April amid international trade restrictions and the war between the United States/Israel and Iran. PCE inflation is increasing at a 3.8 percent annualized basis, much higher than the FOMC’s 2 percent long-term target. Goss, who expects Q2 and Q3 inflation will remain higher than 2 percent, predicted newly-named Fed Chair Kevin Warsh to cut back on the buying of Treasury bonds. “The Fed is really caught between a rock and a hard place, meaning inflation is too high for a rate cut but the economy is too slow,” Goss said. “Too many layoffs and not enough hiring to increase the interest rates.” The report was released the same day at the ISM Manufacturing PMI, which tracks manufacturing activity in the United States. The PMI increased to a nearly four-year high of 54.0 percent from 52.7 percent in April, growth attributed to an increase in output and stockpiling amid the Middle East conflict. Any reading higher than 50 percent signals expansion.
