Iowa’s economy slowed slightly in June with weaker inventories and delivery lead times than the previous month, according to a survey of supply chain managers released last week.

Creighton University’s Mid American Business Conditions Index showed the index for Iowa fell to 69.5 in June, down from 70.2 in May.

The monthly survey is a mathematical average of new orders, production or sales, employment, inventories, and delivery lead times for each state in a nine-state region: Iowa, Arkansas, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Oklahoma. The index ranges between zero and 100, with an index greater than 50 indicating an expanding economy over the next three to six months.

In Iowa, new orders (74.1), production or sales (76.2), and employment (57.6) all increased in June. There was weakening performance in the categories of delivery lead time (81.2) and inventories (62.4).

According to Ernie Goss, director of Creighton University’s Economic Forecasting Group, Iowa’s continued growth in June was in part due to increases in wages in manufacturing.

"According to U.S. Bureau of Labor Statistics, average hourly wages for manufacturing production workers in Iowa rose 7.7% over the past 12 months," Goss said. "Among the nine Mid-America states, this growth ranked third."

For the region as a whole, the Business Conditions Index climbed to 73.5 in June, up slightly from May. It was the 13th month of the last 14 that the index was above growth-neutral.

"Creighton’s monthly survey results indicate that the region is adding manufacturing business activity at a very healthy pace, and that growth will remain strong with the overall regional economy returning to pre-pandemic levels in the first quarter of 2022," Goss said.

Despite the continued improvement, manufacturing supply chain managers say labor shortages and supply bottlenecks continue to restrain growth. Nine of 10 supply chain managers reported delays in June.

The labor shortages reported by supply chain managers are pushing wages higher, Goss said.

"U.S. Bureau of Labor Statistics data indicate that average hourly earnings of manufacturing production workers in the region expanded by 4.9% over the past 12 months," he said.

Other highlights from the July 1 report:

  • The wholesale inflation gauge surged to a record high.
  • On average, supply managers expect prices to advance by another 8.6%, annualized, for the rest of 2021.