Minnesota's manufacturing sector saw signs of growth last month after experiencing big declines in the past several months because of the COVID-19 pandemic.
Demand picked up with new orders surging in July, helping fuel a partial bounceback in economic activity, according to a monthly survey of supply managers. But jobs in the industry continue to struggle and are expected to see some small losses in coming months.
The state's index in the Creighton University Mid-America Business Conditions Index rose into positive territory for the first time since February. It climbed to 54.7 in July, up from 45.0 in June.
It had plummeted to 34.8 in April, the lowest point during the pandemic. Anything above 50 signals growth while below 50 suggests contraction.
"You could characterize it as getting less negative," said Ernie Goss, director of the forecasting group that oversees the index. "We've still got many more months before we get back to pre-COVID-19 levels. We took such a downturn in March and April that we're still digging out of that."
Minnesota's export-heavy manufacturing industry had been harder hit than other states in the region. While still negative, the export numbers showed improvement in the report, which was released Monday.
The regional index of all nine states logged in at 57.4 in July after bouncing back to 50.3 in June.
"Overall, the economy is improving," said Goss. "We've seen improvements now for a couple of months."
About 55% of employers reported job reductions in July, compared to 49% in April. But Goss said he expects the rate of job losses to decline in the coming months. He said some companies are having difficulty hiring and finding workers either because of a mismatch in skills or because of worker reluctance to come back to work.
Manufacturing also showed more improvement in July at the national level, according to a report released Monday by the Institute for Supply Management. In its index, the overall industry rose to 54.2, up slightly from 52.6 in June. But employment also remained depressed in its report.
Timothy Fiore, chairman of the ISM's business survey committee, said it's hard to say where the industry stands now compared with pre-COVID levels, but the growth in July was better than he expected.
"We're growing again from absolutely historically low levels we saw in April," he said. "There's no reason why that growth shouldn't continue. The question is at what rate."
The good news, he added, is that demand is strong.
Last week, data from the Commerce Department showed that the pandemic had taken the biggest toll ever recorded on the nation's economy in a three-month span. The U.S. gross domestic product, a measure of goods and services produced, fell 9.5% in the April-to-June quarter.
Kavita Kumar • 612-673-4113