Minnesota's manufacturing sector showed strong growth through the end of the 2021 and is poised for more this year even as it continues to face challenges from supply bottlenecks and labor shortages.
The state's performance in the Creighton University Mid-America Business Conditions Index rose to 70.2 in December from 65.1 in November.
Anything above 50 signals expansion in the coming months while a number under 50 suggests contraction. The regional index is based on a monthly survey of supply managers.
Minnesota once again logged a higher number than the overall index for the nine-state region, which hit 64.6 last month, up from 60.2 in November. Minnesota outperformed the regional index for most of 2021.
"Minnesota has had a pretty big bounce back," Ernie Goss, director of the forecasting group that oversees the index, said Monday. "Trade numbers have been good even with the supply chain bottlenecks."
While the state still has not recovered all of the manufacturing jobs it lost at the beginning of the COVID-19 pandemic, Minnesota is closer to returning to pre-pandemic employment levels compared to most other states in the index, he said.
Since plummeting to a record low in April 2020, the overall nine-state Creighton index has shown growth for the last 19 of 20 months.
"I would call it remarkable," Goss said of the recovery of the manufacturing sector as a whole. "I think most economists would have to agree. How could you have this major pandemic and still be growing your manufacturing sector? GDP (in manufacturing) is back to above pre-pandemic levels."
He attributed the strong performance in part to big stimulus programs under the Trump and Biden administrations as well as strong action by the Federal Reserve.
Still, manufacturers faced challenges in recent months that slowed growth a bit, he said. Some of the pressures will continue this year.
One in three supply managers in the most recent survey said they expect supply snarls toworsen in the first half of 2022. And about half said omicron was slowing deliveries. In addition, inflation remains high.
But despite those pressures, the economic outlook for the manufacturing sector remains positive in the coming months, Goss said.
The other states included in the regional survey are Arkansas, Iowa, Kansas, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The monthly national index on the manufacturing sector for December issued by the Institute for Supply Management will be released Tuesday.
