July survey suggests economic slowdown ahead for Midwest

? Slumping numbers in a July survey suggest there will be slow to no economic growth over the next three to six months in nine Midwest and Plains states, according to a report issued Monday.

The overall Mid-America Business Conditions Index dropped to 50.6 in July from 53.0 in June, the survey said.

“Businesses tied to agriculture and energy continue to report pullbacks in economic activity, and this is spilling over into the broader regional economy,” said Creighton University economist Ernie Goss, who oversees the survey.

The survey results from supply managers are compiled into a collection of indexes ranging from zero to 100. Survey organizers say any score above 50 suggests economic growth, while a score below that suggests decline. The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Looking ahead six months, economic optimism, as reflected by the July business confidence index, plummeted to 52.4 from June’s 59.9.

“Sinking agriculture and energy commodity prices pushed supply managers’ expectations of future economic conditions lower for the month,” Goss said.

The regional employment gauge rose less than a point in July, to 50.0 from 49.1 in June, Goss said, but it remained at a level pointing to slow to no new hiring in the months ahead.

The new export orders index fell to 47.4 last month from 51.3 in June. The import index dipped only slightly, to 54.7 from June’s 54.8.

“Slowing global economic growth and the rising value of the U.S. dollar reduced new export orders,” Goss said. “On the other hand, the rising value of the U.S. dollar, which makes foreign goods more competitively priced in the U.S, boosted regional imports.”


State-by-state glance

Kansas: The state’s overall index slipped to growth neutral 50.0 in July from June’s 50.1. Components of the index were new orders at 47.7, production or sales at 46.8, delivery lead time at 51.8, employment at 49.4 and inventories at 54.4. “Growth for both durable- and nondurable-goods manufacturers in the state continue to move lower,” Goss said. “I expect overall economic activity in the state to move sideways in the months ahead.”

Missouri: The state’s overall index dropped to 49.4 last month from June’s 50.1. Components of the index were new orders at 44.8, production or sales at 46.3, delivery lead time at 51.1, inventories at 53.7 and employment at 51.2. “As in June, durable-goods manufacturers, including vehicle producers and machinery manufacturers, reported very strong growth for the month. However, this growth was offset by weaker business conditions among nondurable-goods manufacturers,” Goss said.

Nebraska: After remaining above growth neutral for 19 straight months, Nebraska’s overall index dropped slumped to 48.6 in July, compared with 51.3 in June. Components of the index were new orders at 46.4, production or sales at 45.6, delivery lead time at 50.4, inventories at 52.9 and employment at 48.0. “Durable-goods manufacturing, especially those (firms) tied to agriculture, cut jobs and experienced pullbacks in economic activity for the month. Nondurable-goods producers are also reporting weaker economic activity,” said Goss.

Oklahoma: The state’s overall index rose to 48.3 last month from 46.9 in June. Components of the index were new orders at 46.1, production or sales at 45.3, delivery lead time at 50.0, inventories at 52.6 and employment at 47.7. “Both durable- and nondurable-goods manufacturers are shedding jobs. Based on our survey results over the past several months, these losses will extend into the fourth quarter of this year,” Goss said.