The economy expanded in nine Midwestern and Plains states last month despite mounting concerns about tariffs and trade skirmishes, according to a report released Thursday.
The Mid-America Business Conditions Index slumped to 54.9 in October, from 57.5 in September , the report said. The October reading was the lowest since January 2017, but it also was the 23rd month in a row that the index has remained above growth neutral 50.0. The index is based on a survey of supply managers. A reading above 50 signals growth over the next several months.
"The regional economy continues to expand at a healthy pace," said Creighton University economist Ernie Goss, who oversees the survey. "However, as in recent months, shortages of skilled workers remain an impediment to even stronger growth. Furthermore, supply managers are reporting mounting negative impacts from tariffs and trade skirmishes," he said.
Trade restrictions, expanding tariffs and rising short-term interest rates are likely to slow regional growth in the months ahead, Goss said.
The September Business Conditions Index for Minnesota declined to a healthy 60.0 from August's 61.9. Employment stood at 58.8.
"Over the past 12 months, according to U.S. Bureau of Labor Statistics data, Minnesota employers increased the hourly work week by 0.1 percent, well below the regional median, and average hourly pay by 2.5 percent, slightly below the regional median," said Goss.
The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
Survey results cast a shadow on the October employment index, which dropped to 52.2 from 56.2 in September and 58.5 in August.
"Overall manufacturing employment growth in the region over the past 12 months has been very healthy at 2.4 percent, compared to a lower 2.2 percent for the U.S.," Goss said. "I expect this gap to close in the months ahead as regional job growth slows faster than national manufacturing job growth."
Economic optimism, as reflected by the October index, plummeted to a still strong 59.6 from September's 68.0.
"In terms of business confidence, rising trade tensions, tariffs, and interest rates have reduced economic optimism among supply managers in the region," Goss said.
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