Economic survey: Iowa, Midwest see very slow growth during May

OMAHA — Inflation is keeping prices high on all sorts of goods, and a survey of business leaders in Iowa and eight other Midwestern states finds prices rose nearly 6% in the past year, but may only rise three-percent in the year ahead.

Creighton University economist Ernie Goss says the leading economic indicator for the region grew a modest amount during May compared to April on the 0-to-100 scale, where 50 is growth neutral.  “The overall rating remained above growth neutral for the fourth straight month, that’s the good news,” Goss says. “The bad news is, it’s still only slightly above growth neutral, down from 54.8 in April to 51.3 in May, so that’s still moving along, I’d call it very slow growth we’re looking at ahead.”

The overall index specifically for Iowa fell in May to 51.9, a drop from April’s 55.8. The survey found many employers in Iowa and the other states continue having trouble finding qualified workers to fill open positions, so they’re retaining workers, which Goss says is creating another sort of problem.  “Lots of labor hoarding out there, and that’s causing productivity numbers to go down. In other words, we’re recording very low productivity readings for the region, and for the nation,” Goss says. “That’s because you’ve got these workers, the companies just fear letting those employees go. Thus, they retain them, even when there’s not sufficient work for them to do.”

Goss says the survey found only about one in six employers reported job gains during the past month, almost the same as during April. He says a couple of industries, in particular, are struggling.   “The outlook is still of slow growth, but there’s some sectors it’s going to be negative growth and that’s commercial real estate, that’s office space, and particularly in downtown areas of the region,” Goss says. “You’re going to see open spaces there, and unrented office space.”

The banking and finance industry is also “having a tough go of it,” Goss says, with short-term interest rates very high compared to long-term rates.

According to data from the U.S. Bureau of Labor Statistics, manufacturing employment in Iowa expanded by 1.9% over the past 12 months, while manufacturing hourly wages climbed by 6.9% over the same period.