Iowa’s economy expanded in February as fears of recession lingered, according to a monthly survey of supply chain managers.

Creighton University’s Mid-America Business Conditions Index for Iowa rose to 53.2, up from 47 in January. The index ranges from zero to 100, with a score of 50 representing neutral growth.

For the nine-state region covered by the survey, the score reached its highest level since July 2022, climbing to 56.1, up from 47 in January. The index rebounded after falling below growth-neutral for three consecutive months.

The scores for components of the index in Iowa were all above growth-neutral in February, with the exception of employment, which remained below growth-neutral with an index score of 45.3. The others — new orders, production or sales, delivery lead times and inventories — all performed above growth-neutral in February, the report, released Wednesday, showed.

“While it’s too early to tell if this is an end to the downward trend, it was certainly promising on the growth front,” Ernie Goss, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister chair in Regional Economics, said in the report.

But Goss warned that high inflation remains a concern, and “serves as a very negative signal for financial markets and the Federal Reserve.”

According to the report, 4 of 10 supply chain managers expect a recession this year.

Other things to know from the report:
– The employment index for the region rose to 52.3, up from 46.3 in January. In an effort to offset labor shortages, almost half of those responding said they had raised the entry-level wages to match the inflation rate. Twenty percent reported raising entry-level wages above the inflation rate to recruit new employees.
– The whole inflation gauge jumped to 80.6, up sharply from 74.1 in January and 52.1 in December, an indication of greater input price pressures for producers. As a result, Goss said he expects the Federal Reserve to announce a 0.5% rate increase at its meeting later this month.
– The inventory index increased nearly 20 points in February to 58.4, from 38.9 in January, a sign that manufacturing has begun to return to normal levels, Goss said.
– Trade numbers were down significantly for February, with export orders falling to 35.0 from 42.8 in January. Additionally, firms continued to report weak imports due to a weakening regional economy. The February import reading did increase to 42.3, from 34.3 in January.
– The confidence index, which measures economic optimism over the next six months, increased to 38.1, from 25 in January. Goss said supply chain managers cited delays and disruptions as their greatest challenges in 2023.