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Mid-America Manufacturers Report Supply Chain Challenges

Creighton University Economics Professor, Ernie Goss

(KFOR NEWS  September 1, 2021)     OMAHA, Neb.   Since declining to a record low in April of last year, the Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, has remained above growth neutral for 15 of the last 16 months.

Overall Index: The Business Conditions Index, which uses the identical methodology as the national ISM, ranges between 0 and 100, fell to a healthy 68.9 from July’s 73.1. Supply managers reported that supply chain bottlenecks represented the greatest challenge for the next 12 months and was restraining growth.

“Creighton’s monthly survey results indicate the region is adding manufacturing business activity at a healthy pace, and that regional growth will remain positive, but somewhat slower.  Supply chain bottlenecks and labor shortages remain obstacles to growth,” said Ernie Goss, Ph.D., director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.

“Approximately 94% of supply managers reported supply chain bottlenecks for the month with half of those detailing significant supply disruptions,” said Goss.

Employment: The regional employment index remained above growth neutral for August, but sank to 64.6 from July’s two decade high of 67.2. “Even with strong manufacturing job growth, the region has yet to recover all job losses from the pandemic. The latest U.S. Bureau of Labor Statistics data indicate that current regional nonfarm employment is down by 431,000 jobs, or 3.3%, compared to pre-COVID-19 levels,” said Goss.

Even with healthy job growth for the month, firms continue to report difficulties in finding and hiring new workers. One of five supply managers said finding and hiring qualified workers will be the greatest challenge for the next 12 months.

As reported by one supply manager, “Where did all the workers go?”

Other comments from supply mangers in the August survey were:

  •   “Very difficult to get balance. Feel like a ‘fiddler on the roof.’”
  •   “There has been a significant movement away from plastic products to paper-based packaging. This has significantly added to an already constrained market.”
  •   “We are a heavy and medium duty truck dealership with sales, rental/leasing, service, parts and collision centers. Biggest challenges are delays on factory orders of new trucks with demand far outpacing supplies/deliverable orders.”
  •  “Supply bottlenecks on assembly parts, collective bargaining work stoppages impacting new truck production, driver shortages are all impacting our sales efforts.”

August Survey Results at a Glance:

  • Creighton’s regional Business Conditions Index climbed into a range indicating healthy, but slower, growth for the next three to six months.
  • Supply managers reported that supply chain bottlenecks represented the top challenge for the next 12 months.
  • Approximately 94% of supply managers reported supply chain bottlenecks for the month.
  • Supply managers ranked soaring input prices as the second greatest challenge for the next 12 months.
  • Confidence index fell for the third straight month.

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