Job growth in May hit a 10-year high for the Midwest, according to a regional economic survey.
“Despite sharply higher short-term interest rates and upturns in energy prices, firms reported strong hiring for the month,” said Ernie Goss, a Creighton University economics professor whose group runs the survey.
The May employment score hit 65.5, up from April’s 64.5, according to the May Business Conditions Index for the Mid-America region. The region added more than 90,000 jobs this year.
“This year’s graduates and summer job seekers are entering one of the best job markets since 1999,” Goss said.
The overall index for May dipped to 65.7 from April’s 66, but Goss says the region’s economy continues to grow.
The Business Conditions Index ranges between 0 and 100. An index value of 50 or greater indicates an expanding economy over the next three to six months. An index value of less than 50 indicates a negative outlook.
The Mid-America index surveys supply managers and business leaders in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The prices-paid index, which tracks inflation at the wholesale level, rose to its top level since November 2005, reading at 83, up from April’s 79.1.
Goss said this is an indicator that the Federal Reserve will raise interest rates will raise again in late June.
“I expect this and other inflation gauges to push the Federal Reserve Open Market Committee to once again raise interest rates at its next meeting on June 28-29,” Goss said.
But he said the three rate increases this year, along with high oil prices, failed to slow the regional economy. Another boost will have little impact on confidence among supply managers, he said.
Goss has criticized the Fed in the past for raising interest rates too much in its current campaign.
“In a rate tightening regime, the Fed normally overdoes it by raising rates too long and too high as they did in May 2000 when they increased rates only to see the economy go into a recession 9 months later,” Goss said Thursday. “I fully expect current rate hiking to restrain growth below levels acceptable to U.S. citizens and businesses. However, the Fed's number one responsibility is price stability--not low rates of unemployment.”
The May confidence index went up to 62.3, compared to last May’s 58.6.
New export orders rose to 61.5, its highest point in two years, and the import climbed to 65.8.
Other factors in May’s index were: new orders at 67.6, down from 70.2; production at 69.9, up from 69.8; and inventories at 58.7, down from 60.8.
May delivery lead-time increased to 59.4, its highest since September 2004, and up from April’s 59.
A delivery lead-time index greater than 50 indicates potential shipping and delivery delays, and normally precedes upward pressures on prices in the near term.
Goss heads the Creighton Economic Forecasting Group, which has conducted the monthly survey of supply managers in the nine states since 1994.
The Associated Press and Journal Star reporter Richard Piersol contributed to this report.
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