Supply manager optimism falls to 29-month low

Supply manager sentiments fell to its lowest level since June 2020 amid a rise in inflation and extensive job losses in the manufacturing sector, according to Creighton University's November Mid-America Manufacturing Index. .The Business Conditions Index fell to 42.2 last month from 51.5 in October. Any mark above 50 indicates growth, while any number below signals contraction. The reading indicates recessionary conditions in regional manufacturing, said Ernie Goss, director of Creighton University's Economic Forecasting Group. According to the U.S. Bureau of Labor Statistics, the region has lost 12,000 manufacturing jobs since April. .The index tracking economic confidence rose to 35.8 from 25 in October as only 14 percent of supply managers expect business conditions will expand over the next six months. The majority of supply managers cited the potential recession as the top threat to their firm's business activity. .The index for new orders fell 9.5 points to 40.5, while the production or sales index fell 14 points to 35.7. The index for the speed of deliveries of raw materials and supplies fell 10 points to 50 from 60 in October amid a reduction in supply chain challenges and delivery bottlenecks. .The regional hiring gauge fell to 42.5 from 47.5 in October as the regional average manufacturing wage rate increased 3.4 percent over the past 12 months, slightly higher than the 3.2 percent rise in consumer prices..The wholesale inflation gauge rose to 71.1 in November from 55 the previous month. Goss expects the federal government will hold its benchmark federal funds rate to a range of 5.25 to 5.5 percent until at least the end of January. "The month's reading raises the risk of stagflation — an economic downturn and excessive inflation," Goss noted. "However, this is just one month's reading. It will take several more readings like this to get overly concerned about stagflation." .The index reflecting levels of raw materials and supplies fell to 42.6 from 50.1 in October as manufacturing firms that had been increasing their inventory in previous months expressed concern over the sales outlook amid slowed growth. Trade numbers improved, with the index for new export orders rising to 54.6 from 41.7 in October. Imports fell 3.5 points in November to 46.7.