Drought continues to slow Midwest economy

Regional survey predicts federal agricultural aid will help recovery

? Minnesota recorded its best economic month since before the recession started, while the impact from the lingering drought continues to drag on the economies from North Dakota to Kansas, according to a regional survey of companies.

The mixed bag that makes up the nine-state Midwest economy continued to chug along in February despite the drought, threat of war, higher energy prices and a lack of new hiring, the Mid-American Business Conditions Survey released Monday showed.

The overall index remained above 50 for the fifth straight month, but the reading of 53.9 was down slightly from January’s solid 54.5, Creighton University economics professor Ernie Goss said.

Indexes below 50 indicate a contracting economy, while numbers above 50 indicate expansion.

In Minnesota, the overall index rose to 54.1 — its highest level since September 2000, six months before the start of the recession.

Minnesota companies have more of an international presence than other Midwestern states and benefited from the dramatic declines in the value of the dollar during the past year, Goss said.

Drought is having an impact on rural businesses in Nebraska, the Dakotas and Kansas. However, Goss said the recent $3.1 billion federal aid package will help these states.

Here’s a summary of February’s Mid-America Business Conditions Survey in Kansas:The overall index dropped from January’s 60, but still remained at a strong 57.7. While robust numbers were recorded for new orders at 69.2, production at 65.4 and inventories at 53.8, the employment reading of 38.5 indicates that firms reduced employment from January levels.

The drought is not tracked in the survey’s questions, but Goss said some company managers in those four states included comments noting the impact of the drought.

Goss conducts the monthly survey in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.