Manufacturing growth in Minnesota, the Midwest and the United States as a whole continued a strong growth trend in November, helped by booming exports and employment growth.
As is seasonally expected, Midwest and U.S. manufacturers experienced a slight dip in the pace of factory growth in November, according to two closely watched reports released on Friday.
Creighton University's Mid-America Business Conditions Index fell from 58.8 in October to 57.2 in November. The Institute for Supply Management (ISM) report, which measures the nation's manufacturers as a whole, fell from an index of 58.7 in October to 58.2. Any score above 50 indicates economic expansion.
Thomas Simons, senior money market economist at Jefferies LLC, said in a research note Friday that the November ISM number "is a shade weaker than expectations."
However, he was not concerned. "Despite the decline this month, the index was still at a very strong level," he wrote. "Just two months ago, the producer manufacturers index was at the highest level since May 2014."
Minnesota managed to buck the slight decreases seen in other states as manufacturing for holiday orders slowed.
Minnesota's business conditions index rose to 57.8 in November from 56.3 in October amid solid growth in new orders, production and hiring gains.
"Over the past 12 months, Minnesota expanded both durable and nondurable goods manufacturing. The state added 4,000 manufacturing jobs over the past 12 months for a 1.3 percent addition," said Ernie Goss, director of Creighton University's Economic Forecasting Group.
November's Mid-America index found Midwest producers realized gains from exports, new orders, production and employment. Inventories rose, but delivery speeds for supplies and raw ingredients fell during the month.
Still, the overall index marked the 12th consecutive month of growth for factories in the central core of the country. Besides Minnesota, the Mid-America report tracks manufacturers' progress in Iowa, Nebraska, Kansas, Missouri, Arkansas, Oklahoma and North and South Dakota.
The nine states tracked added a combined 25,000 jobs in the last 12 months, Goss said.
Even so, Creighton's survey of factory managers showed that not everything was rosy across the Midwest.
The final report found that inflation pressures continue. The nine-state regional wholesale inflation gage was 71.4 in November, not much improved from October's 75 index.
"Given the elevated inflationary readings from our surveys and government surveys over the past several months, I expect the Federal Reserve to raise short-term interest rates this month. However, this increase will not dampen economic activity in the region to any great extent," Goss said.
Producers such as 3M Co., Ecolab, glue maker H.B. Fuller and filtration equipment giant Donaldson Co. have all reported seeing higher raw-material costs this year. Several firms said they expected to take action to curb the impact of inflation on their operations. Some have considered increasing prices on final products, switching to lower-cost ingredients or absorbing the costs by improving production efficiencies, company officials said.
In the ISM survey, 14 of 18 manufacturing industries reported growth, led by makers of paper, machinery, transportation equipment, computers and electronic products. Makers of wood, petroleum and coal products lost ground in November.
U.S. producers reported increases in new orders, production, exports and imports during the month. They also experienced declines in employment, slower supply deliveries, and increased prices in November.
Dee DePass • 612-673-7725
