Archive for Monday, August 3, 2009

Monthly survey finds signs of improvement in Midwest economy

August 3, 2009


— A survey of supply managers and other business executives in nine Midwest and Plains states suggests the region’s economy is expanding for the first time in almost a year.

The Mid-America Business Conditions index released Monday rose to 51.7 in July from June’s 49.3. July’s index was the first time since August 2008 that it rose above growth-neutral 50.

The survey’s index ranges between 0 and 100. Any score below 50 suggests a contracting economy over the next three to six months, while a score above 50 indicates an expanding economy.

Creighton University economics professor Ernie Goss says recent index numbers indicate the regional economy is on the mend.

“I expect the nine-state region to record positive growth, but with little or no job additions for the rest of 2009,” Goss said.

The survey states are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

The July employment index inched up to a still-weak 43, from June’s 41.4. Survey authors said government data shows that the region lost jobs at a rate of 3.5 percent over the past three months.

“This month, business buyers were asked whether they expected more layoffs for their firms for the rest of 2009,” Goss said. “Almost 60 percent expect more layoffs for the rest of 2009.”

Goss said the survey shows prices for raw materials and supplies have risen above growth neutral for a second straight month.

“We are seeing the first signals of heightened inflationary pressures,” Goss said of the prices-paid index. “Consumers, business leaders and investors need to brace for higher inflation and higher interest rates in 2010.”

Looking ahead six months, economic optimism in July declined to a still-healthy level of 62.8, from June’s 67.7.

July’s overall index also had new orders at 58.3, up from June’s 53.4; production at 58.7, up from 54; and delivery lead time at 53, up from 51.

Goss and the Creighton Economic Forecasting Group have conducted the monthly survey since 1994.

The Institute for Supply Management, formerly the Purchasing Management Association, began to formally survey its membership in 1931 to gauge business conditions. The Creighton Economic Forecasting Group uses the same methodology as the national survey.


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