WisBusiness: Midwest economy remains sluggish in Fed Beige Book Report

By Tracy Will

For WisBusiness.com

Though April unemployment showed slight improvement across the Midwest (except Ohio), mixed economic signs persist in the Federal Reserve Board’s June Beige Book released today. The Beige Book is an anecdotal look at economic conditions across the country.

Although auto sales inched up in May, auto industry bankruptcies and poor demand for heavy trucks and machinery produced further job losses in Midwestern states. The Fed’s Beige Book reported that hiring remained low outside of education, healthcare, and technical fields such as engineering and information technology.

In April, Iowa had the lowest regional unemployment with 5.1 percent, followed by Minnesota at 8.1 percent, Wisconsin at 8.6 percent, Illinois at 9.4 percent, Indiana at 9.9 percent, Ohio at 10.2 percent (a rise of 0.5 percentage points), and Michigan at 12.9 percent.

Housing remained stagnant with residential and multi-family housing starts at historic lows, though slight improvements were seen in Midwestern residential housing starts in April according the Federal Reserve Bank of St. Louis.

Nationally, new orders for manufactured goods increased $2.5 billion or 0.7 percent to $344.4 billion in April, up two of the last three months, according to the U.S. Census Bureau. The Beige Book reported improved demand in pharmaceuticals, power generation, and defense-related aerospace. Census Bureau statistics indicate manufacturers continued to reduce their inventories in May, though distributors struggled to reduce heavy equipment inventory according the Fed Beige Book. 

In farm country, corn was only half-planted by the Beige Book deadline due to wet fields, setting back soybean planting. Farmers saw lower prices for beef, but pork prices, initially depressed after the H1N1 flu scare, rebounded in May. Wisconsin dairy farmers’ low milk prices have triggered federal emergency price supports.