Nebraska Supply Manager Report from the Heider College of Business: For the ninth straight month, Nebraska’s Business Conditions Index rose above growth neutral 50.0. However, the September index, a leading economic indicator from a survey of supply managers in the state, fell to a tepid 51.8 from August’s 54.8. Components of the index for September were new orders at 49.6, production or sales at 55.5, delivery lead time at 58.4, inventories at 49.7, and employment at 45.9.
“Economic growth for Nebraska will remain positive for the second half of 2014 based on our surveys over the last several months. Since the national recovery began in July 2009, the manufacturing sector in Nebraska added approximately 5,400 manufacturing jobs for a 5.9 percent job gain. However for 2014, the state’s durable goods manufacturing firms have added no jobs,” said Goss.
Professor Goss (October 2014 Newletter):
- I expect Quarter 3 GDP growth to come in at a tepid 2%. Too many Q3 jobs added were part-time and/or low paying jobs.
- I expect housing prices growth to continue to move lower but remain positive.
- "GDP in the United States is projected to grow at 2.0 percent in 2014, with the second half of this year revised lower-from an average of a 2.8 percent pace to about 2.5 percent pace. The continued slow pace of wage growth and consumer reluctance to finance purchasing (despite improved confidence) implies a little less spending than previously estimated. And, consequently, both investment and inventories are also likely to expand a little less than expected. Still, 2.5 percent growth is slightly above long-trend growth, and it is likely to continue into 2015. Despite these anemic growth rates, the US economy might be approaching full capacity soon."
Opportunities
- The U.S economy added 248,000 jobs in September and the unemployment rate declined to 5.9% from August's 6.1%.
- Leading economic indicators from Creighton's regional survey of supply managers and the Institute for Supply Management's national survey dropped but continue to point to positive growth for the fourth quarter of 2014.
- In the 12 months ending in July 2014, the Case-Shiller index indicated average U.S. home prices rose by 5.6%, a bit lower than 6.2% for June but still a very healthy value.
- U.S. average hourly pay dropped by a penny in September. Over the past 12 months, average hourly pay has increased by only 2%, or approximately the rate of inflation.
- While the 0.2% decline in the consumer price index (CPI) for August was good news for the consumer, it raises the concern that the economy is still on shaky grounds.
- More than 97,000 workers left the labor force in September bringing the nation's participation rate (i.e. the share of the working age population in the labor force) to its lowest level in more than 3 decades.