Midwest economic index up in August

Omaha, Neb. ? The Mid-America region’s overall economic index rose in August despite higher gas and oil prices causing a drop in confidence, a monthly survey of the region’s supply managers and business leaders suggests.

The overall Business Conditions Index for Kansas dropped for the third straight month, to its lowest level since January. The index hit 56.8, compared with 57.7 in July.

Components included new orders at 56.7, production at 63.3, delivery speed at 40.0, inventories at 33.3 and employment at 73.3.

Kansas’ confidence index dipped to 66.7 in August, from 67.9 in July.

The August index rose to 60.4, from 59.7 in July. The confidence index declined to 54.1, which is its lowest reading since the 2001 recession. Creighton University economics professor Ernie Goss said the effects of Hurricane Katrina would likely drive confidence down further.

“The tragedy in New Orleans and the U.S. Gulf Coast will certainly contribute to higher prices in the months ahead,” Goss said.

The prices-paid index, which monitors wholesale-level inflation, jumped to 73.1 from July’s 60.9. The increase is the largest one-month jump since the survey began in 1994, Goss said.

The higher prices are blocking job growth in industries such as vehicle manufacturing. The lack of growth was evident in the new-jobs index, which dropped to 57.5 from 60.7 in July.

The overall Business Conditions Index ranges from 0 and 100. An index of more than 50 indicates an expansionary economy during the next three to six months.