Report shows improved Midwest economic outlook

? Falling grain and fuel prices have hurt businesses tied to those industries, but have helped consumers open their pocketbooks, leading to an improved economic outlook for nine Midwestern and Plains states, according to a monthly report released Friday.

The survey of business leaders conducted by Creighton University put the region’s overall economic index at 54.4 in December, a jump from November’s 51.3.

“Over the past six months, a 26 percent decline in grain prices and a 13 percent plunge in fuel and related products have had negative impacts on businesses with ties to agriculture and energy,” according to Creighton economist Ernie Goss, who oversees the survey. “At the same time, these price declines have produced positive impacts for firms more closely tied to the consumer.”

Business leaders appeared somewhat less optimistic about their prospects over the next six months. The confidence index dropped to 58.1 from November’s 61.5.

“Weaker economic conditions in the regional energy and agriculture sectors offset improvements in the national and regional job market in terms of supply managers’ business outlook,” Goss said.

The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota. 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 employment index improved to 56.5 from November’s anemic 49.4, pointing to possible job growth in the next three to six months, Goss said.

The prices-paid index, which tracks the cost of raw materials and supplies, was at its lowest level in five years, coming in at 50.8 from November’s 56.4. Goss said the stronger dollar combined with weaker global demand has kept inflation pressures down.

The inventory index improved to 53.4 from November’s 52.8 as supply managers added to their inventories of raw materials and supplies.

Other components of the December index:

— Export orders sank to 52.7 from 57 in November.

— Imports rose to 56.7 from 51.

— New orders jumped to 54.3 from 50.7.

— The sales index fell to 49.2 from 52.2.

— Delivery speed of raw materials soared to 58.9 from 51.4.


Kansas outlook

The state’s overall index rose slightly, to 62.6 in December from November’s 62.2. Components were new orders at 64.5, production or sales at 62.2, delivery lead time at 62.2, employment at 54.8 and inventories at 69.2.

“For 2014, the leading industry for Kansas was telecommunications, while its lagging industry was aerospace manufacturing. Based on our survey results, I expect Kansas to add jobs at a solid pace for the first half of the year, with pullbacks in exports restraining growth, but at a still healthy rate,” Goss said.


Missouri outlook

Missouri’s overall index rose to 55.7 from 54.9 in November. Components of the December index were new orders at 56.6, production or sales at 58.3, delivery lead time at 58.4, inventories at 53.8 and employment at 51.6.

“For 2014, Missouri’s leading industry was transportation equipment manufacturing, while its lagging industry was telecommunications. Based on our survey results, I expect Missouri to add jobs at a solid pace for the first half of the year, with pullbacks in exports restraining growth to a still-healthy rate,” Goss said.


Nebraska outlook

For the 12th straight month, Nebraska’s overall index remained above growth neutral in December. The index rose to 52.7 from 51.6 in November. Components were new orders at 51.1, production or sales at 46.6, delivery lead time at 51.1, inventories at 59.8 and employment at 54.7.

“For 2014, Nebraska’s leading industry was food processing, while its lagging industry was machinery manufacturing. Based on our survey results, I expect Nebraska to add jobs at a solid pace for the first half of the year, with pullbacks in the export of agriculture commodities restraining growth to a still-healthy rate,” said Goss.


Oklahoma outlook

The state’s overall index dipped slightly in December but still signaled growth in the next three to six months. The index dropped to 54.0 from 54.5 in November. Components were new orders at 58.2, production or sales at 54.5, delivery lead time at 46.5, inventories at 52.8 and employment at 58.2.

“For 2014, Oklahoma’s leading industry was machinery manufacturing, while its lagging industry was food processing. Based on our survey results, I expect the state to add jobs at a positive but weaker pace for the first half of the year, with pullbacks in the state’s energy sector and firms tied to energy restraining growth,” he said.