Omaha, Neb. ? The Midwest economy continues to enjoy economic growth despite continuing inflationary pressures, according to the monthly survey of supply managers and business leaders in a nine-state region.

The Mid-America Business Conditions Index for June rose to 68.2 from 67.3 in May. Readings are consistent with economic growth approaching 5 percent on an annual basis for the region. This compares to a U.S. growth number of 4.5 percent.

While the overall index continues to point to solid economic growth, the prices-paid index continues to be a source of concern, said Creighton University economics professor Ernie Goss.

June’s inflation index of 86.9 was almost unchanged from May’s reading and remains at an unacceptably high level, Goss said Thursday.

“Yesterday’s move by the Federal Reserve, raising rates by a quarter percent, is just the opening salvo, and a minor one at that,” Goss said. “I expect a rate hike at the August meeting of a half-percent, or 50 basis points, assuming the Fed does not bend to political pressures with a smaller increase.”

The June rate hike and recent oil price declines will not be enough to slow inflationary pressures, Goss said.

Supply managers reported oil-related price increases along with steel price increases of more than 20 percent from late last year.

The employment index for the region rose to 65.4 from May’s 63. The nine-state region has gained more than 90,000 jobs, or 1.8 percent annualized growth for 2004.

The overall index, referred to as the Business Conditions Index, ranges between 0 and 100. An index greater than 50 indicates an expansionary economy over the course of the next three to six months.

In Kansas, the overall index remained at a very strong 74.9, up from May’s 72.6. Job growth for the first half of 2004 was 1 percent annualized. Goss said he expected the pace of job growth to approach an annualized rate of 2 percent the second half of the year.

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