Omaha, Neb. ? The mid-America business conditions index declined in December, although though confidence remains high, according to the monthly survey of supply managers and business leaders in a nine-state region.

The overall index closed at 55.9 for December, down from 59.4 in November. This was the lowest reading since May 2003 for the overall index, compiled from a survey conducted by Creighton University economics professor Ernie Goss.

Most components of the index point to improving economic conditions in the region with the employment index rising above growth-neutral for the sixth consecutive month.

A drop in new orders to 59.9 from November’s robust 67.1 was mainly to blame for the decline in the overall index.

Despite the December mad cow disease occurrence, the confidence index rose to a record high 81.1. The confidence index tracks the economic outlook for survey participants six to nine months out.

However, 75 percent of the survey was completed before the public announcement of the discovery of mad cow in a Washington state cow by the U.S. Department of Agriculture, Goss said Friday.

At the same time, employment showed continued signs of recovery with a December reading of 52.8, up from 51.8 in November. A solid reading of 58.6 was also calculated for December production.

The December inventory index of 48.2 indicates that businesses in the region continue to restrain inventory costs by cutting back on the stock of raw materials and supplies.

Accompanying improving economic conditions has been an upward trend in inflationary pressures.

“I expect rising inflationary pressures to push the Federal Reserve to raise interest rates, perhaps as early as the second quarter of 2004,” Goss said.

Not yet detected by the survey is the potential fallout from the Asian ban on U.S. beef products stemming from the mad cow incident, Goss said.

Exports to Asia represent an important economic stimulus to this part of the nation, Goss said. Absent a lifting of the embargo, or an increase in white meat exports, Goss said he expects the ban to reduce jobs.

States in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma, and South Dakota.