(The Center Square) – South Dakota’s leading manufacturing export has sunk by more than 5%, but its overall business conditions index rose to near growth neutral in September, according to a report.
The state’s index rose to 49.8 last month, up from 43.4 in August, according to Creighton University’s Mid-American Economy report, which measures economic conditions for the nine-state region from Minnesota to Arkansas. A 50 represents growth neutral.
Despite South Dakota’s leading manufacturing export, processed foods, decreasing by 5.4% over the past year, its manufacturing exports overall have grown from $1.27 billion to $1.34 billion – a growth rate of 5.8%, the report found.
The nine-state region’s business conditions index moved above the growth neutral threshold last month after two straight months of remaining below 50, according to the report.
However, many economic indicators remain weak as the region saw modest gains in manufacturing employment, coming on the heels of marked job losses two months in a row and elevated inflationary pressures.
“The Mid-America regional manufacturing economy has weakened from earlier in the year and from the same period in 2022,” said Ernie Goss, PhD, director of Creighton University’s Economic Forecasting Group. “Government data indicate that the regional manufacturing economy has lost jobs for four of the past five months.”
South Dakota’s unemployment has remained steady at 1.9%, below the national average of 3.8%, according to the South Dakota Department of Labor and Regulation (DLR). The state’s labor force increased by 8,800 from August 2022 to August 2023, while the number of unemployed decreased by 1,200, DLR reported.
From July to August, South Dakota increased its labor force by 400 workers while unemployment increased by 100, according to DLR.
Economic confidence across the region is shaky, with nearly one-third of supply managers surveyed saying they expect a recession in the next six months, according to Creighton University’s Mid-American economy report. Less than 5% expected business conditions to improve.
Meanwhile, wholesale inflation has risen, with just over 40% of supply managers reporting increased wholesale prices.
Goss said the Federal Reserve will likely raise short-term interest rates by 0.25% in the last quarter of the year during its December meetings.
“The rapid expansion in federal government spending will push the Federal Reserve to keep its foot on the economic brakes via raising short-term rates,” said Goss. “I expect one more rate hike in quarter four — with no change at the Fed’s Oct. 31-Nov. 1 meetings.”
