Omaha, Neb. ? The Midwest’s manufacturing sector grew in August, pointing to solid improvement in the second half of the year, a monthly survey of business leaders indicated Monday..

The overall index in the Mid-America Business Conditions Survey rose to 60.2, its highest level in more than three years and up from July’s 56, said Ernie Goss, the Creighton University economics professor who conducts the survey.

A reading above 50 means manufacturing activity is growing; below 50 indicates the industry is slowing.

Durable and nondurable goods manufacturing, along with value-added services, reported growth in August, Goss said.

Goss conducted the survey in nine states to produce a leading economic indicator of the Midwest. States included were Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma, and South Dakota.

The overall index in Kansas increased to 67 from July’s strong 55.9 and June’s weaker 48.1. Solid readings for new orders and production at 70, combined with a much stronger employment reading of 60, helped to push the overall index higher. However, the strong August employment reading was off of a weak July reading of 40.

“U.S. Bureau of Labor Statistics data and our survey indicate that Kansas has begun to experience job growth, albeit slowly,” Goss said. “I expect the Kansas economy to add jobs for the remainder of 2003.”

August’s Midwest employment index rose relatively slowly, to 53.8 from July’s 51.1, as companies restructured their work force and relied on overtime and higher productivity to slow job growth, Goss said.

Rising energy prices threaten to dampen the recovery. The prices paid index, which reflects prices for raw materials like energy, increased to 56.4 from July’s 54.7.