News Column

January Manufacturing Indicators Show Growth

Feb. 1, 2012

Patrick Kennedy

manufacturing

Creighton University's monthly Business Conditions Index for January took its biggest jump since October 2009. The index of manufacturing activity for the nine-state Mid-America region jumped to 55.9 from 50.0 in December. Readings above 50 indicate expansion.

The index measures new orders, production or sales, employment, inventories and delivery lead time. It uses the same methodology used by the National Institute for Supply Management (ISM) whose January report, also released Wednesday, rose 1 percentage point to 54.1, up from December's figure of 53.1.

The ISM report showed that the overall economy grew for the 32nd consecutive month and the that economic activity in the manufacturing sector expanded in January for the 30th consecutive month.

The Mid-America report, which had shown a steep drop in December from November, may have been uncommonly low, according to the survey's authors.

"It now appears that December's tepid reading was due to seasonal or nonrecurring factors such as the flooding in Thailand, which disrupted the regional supply chain," according to Ernie Goss, director of Creighton's Economic Forecasting Group.

Goss said readings from surveys indicate an advancing economy with farm income being a factor. "For much of the region, very healthy farm income has been an important driver of overall economic growth," Goss said in the school's release. "Almost one in five, or 19 percent, of supply mangers reported that growth in farm income has been an important factor pushing their firm's growth higher."

Rising energy prices and increasing federal regulations were given as the biggest risk factors to a growing economy. Forty-six percent of supply managers surveyed by Creighton said rising energy prices were the greatest threat to growth prospects for their firm.

The national ISM survey is obtained from a survey of national manufacturing supply managers.



Source: (c) 2012 the Star Tribune (Minneapolis)