Supply manager sentiments weak heading into ’25

Supply manager sentiments remained relatively muted in the last month of 2024, according to Creighton University's December Mid-America Manufacturing Index. .The Business Conditions Index fell to 48.7 from 49.6 in November, just under the growth-neutral score of 50. Any reading above 50 signals growth in regional manufacturing. The BCI remained around 50 last year, falling below that figure seven of the 12 months. .The index tracking economic optimism for the next six months fell to 52.8 from 55.6 in November. Forty-five percent of supply managers expect a recession this year, according to the report. A roughly even percentage expect no recession but slow growth, while 9 percent project strong growth in the year ahead. The regional inventory index fell to 49.1 from 51.8 in November. Creighton Chair in Regional Economics Ernie Goss attributed part of the lack of confidence and inventories to the looming Jan. 15 strike of East Coast and Gulf Coast longshoremen. .The strong condition of the dollar is making domestic manufacturers less competitively priced and weakening the exports market, Goss said. He sees the strong status of the dollar as limiting the ability of President-Elect Donald Trump to implement tariffs when he takes office later this month. Implementing tariffs on a strong dollar will bring "fairly significant and negative impacts on the manufacturing sector," Goss added. According to the U.S. International Trade Administration, regional manufacturing exports last year increased 1.2 percent from the same period in 2023. .The hiring index increased two points to 46.4 even as the U.S. manufacturing sector shed 73,000 jobs last year, including 4,500 positions across the region. Iowa, Kansas, Minnesota, Oklahoma and South Dakota lost manufacturing jobs, while employment grew in Arkansas, Missouri, Nebraska and North Dakota. .The inflation index increased a half-point to 57.1. The Consumer Price Index has increased 2.8 percent over the past three months on an annualized basis, while annualized core inflation rose 3.6 percent during the same time. .Goss isn't expecting the Federal Open Market Committee to lower interest rates in January or March, even with a slowing manufacturing sector. "The Fed, in my judgment, is not going to be able to raise interest rates, because of these higher inflationary pressures in the weeks and months ahead," Goss said..Goss sees FOMC members as divided between Bearish and Bullish outlooks. "I'm obviously in the Bearish camp," he said. "I do think the economy is cooling. I do think, unfortunately, that there is too much inflationary pressure, even with a cooling economy."