Two major manufacturing indexes dipped into negative territory for the first time since May 2020.
Manufacturing indexes turn negative for the first time since spring 2020
One survey also showed Minnesota's firms signaling contraction in November.
December 1, 2022 at 9:34PM
Ernie Goss, who leads Creighton University's Mid-America Business Conditions Index, said the monthly survey of supply managers is flashing warning signs of a possible recession in the first half of 2023.
"I think it's going to be a shallow recession," Goss said. "It's not just this month's reading. It's what we've been seeing over the last several months of moving lower and lower."
Since hitting 71.3 in March, the business conditions index for nine central states, which includes Minnesota, has fallen six of of the last eight months. The leading indicator fell into contractionary territory, which is anything below 50 on the 0 to 100 scale, with a reading of 48 in November, down from 53.1 in October.
"It's the lowest reading we've recorded since the early days of the pandemic," said Goss, adding that the sector had held up well until now but is now showing signs of weakness.
Minnesota's index fell to 48.8 in November, down from 53.5 in October. New orders, production or sales, and employment were all in negative territory, while delivery lead times and inventories were slightly positive.
A national barometer of the manufacturing sector put out by the Institute for Supply Management, which uses the same methodology, also came in below growth neutral last month. It was at 49, down from 50.2 in October.
In the mid-America survey, supply managers said higher input prices was their biggest challenge for the rest of the year and heading into 2023.
"So, inflation is still rearing its ugly head out there," Goss said.
That was followed by concerns about a recession, supply chain disruptions and labor shortages. About 65% of firms said they didn't have enough applicants for open positions.
An annual survey of Minnesota manufacturers by Enterprise Minnesota recently found that more than 40% expect a recession next year.
The Federal Reserve is trying to tamp down high inflation with aggressive interest rate hikes to slow down the economy. But in the process, Fed policymakers themselves acknowledge there is a decent chance it could also send the country into a recession.
In the meantime, there are mixed signals about the current state of the economy. The Commerce Department reported Thursday that consumer spending increased 0.8% in October, the strongest gain in months. On Wednesday, it said that its second estimate for third-quarter GDP growth was 2.9%. That was higher than its initial estimate of 2.6% made a few weeks ago.
And the labor market, while showing some signs of cooling off, remains fairly strong. New claims for unemployment insurance fell last week and remain near pre-pandemic slows, the Labor Department reported Thursday.
Another closely watched economic metric — the monthly U.S. jobs report — will come out on Friday.
Pioneering surgeon has run afoul of Fairview Health Services, though, which suspended his hospital privileges amid an investigation of his patient care.
