Farm income helps lift Midwest economy, survey says

Omaha, Neb. ? Higher farm income is helping improve the rural Midwest economy, according to a monthly survey released Monday.

The overall economic index in the Mid-America Business Conditions Survey improved again in November, showing continued signs of economic recovery.

The overall index rose to 59.4 in November — the second-highest level for the nine-state region since April 2000. The index was 57.9 in October.

A reading above 50 indicates economic growth, while reading below 50 indicates economic loss.

Creighton University economics professor Ernie Goss, who conducts the monthly survey of supply managers and business leaders, said higher farm income was playing a role in the recovery.

“In addition to pointing to a solidly improving economy, our monthly survey indicates that inflationary pressures are also trending upward,” Goss said Monday. “Higher prices for commodities and imported goods, along with an improving national economy, are all contributing to higher prices for raw materials and supplies bought by regional businesses.”

Although inflation remains modest, Goss said he expected current trends to push the Federal Reserve to raise interest rates as early as the second quarter of 2004.

Goss said that while the farm sector was not surveyed, firms that sold to the agriculture industry were polled. The strongest farm income since 1996 for most of the region is having a positive impact on firms with close ties to agriculture, he said.

The Kansas Business Conditions Index declined slightly for the month of November to 56.9 from October’s solid 57.5. November readings were 72.5 for new orders, 60.5 for production and 50 for inventories.”On the negative side, the employment reading of 42.9 indicates that businesses reduced jobs for the month,” said Ernie Goss, Creighton University economics professor who conducted the survey. The November confidence index stood at 81.

The November employment index was down slightly at 51.4, which represents continued job gains for the region. November was the sixth straight month that the index had been above 50, but the job readings indicate job growth at an annualized growth rate of less than one-half of 1 percent.

The inventory index was 48.6 in November, relatively unchanged from October. Goss said he expected inventories to grow slowly in the coming months.

The business confidence index rose to 80 — its highest level since the survey began in 1994.

States included in the Mid-America economy survey were Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.