May economic report suggests slow growth ahead in Midwest

? Slower economic growth is likely through the end of the third quarter this year for nine Midwestern and Plains states, according to a report issued Monday.

The survey report says the overall Mid-America Business Conditions Index dropped to 50.4 last month from 52.7 April. Survey organizers have said any score above 50 suggests economic growth, while a score below that suggests decline.

Creighton University economist Ernie Goss, who oversees the survey, said “firms linked to energy and agriculture are experiencing pullbacks in economic activity.”

“Job growth in Oklahoma and North Dakota, two energy-producing states, has moved into negative territory,” Goss said. And states dependent on agriculture also are experiencing slower economic growth, which Goss said could slacken even further in the next few months.

The survey results from supply managers were compiled into a collection of indexes ranging from zero to 100. 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 May business confidence index, declined to 58.3 from April’s 61.5.

“Weak regional and national growth has pushed supply managers to lower their expectations about future economic conditions,” Goss said.

On the trade front, the survey report said the new export orders index slid to 50.0 from 53.5 in April. The import index for May rose to a still weak 48.8 from April’s 46.8.

“Over the last year, the value of the U.S. dollar has risen by more than 16 percent against the currencies of our chief trading partners,” Goss said. “This movement has made U.S. goods less competitively priced abroad and foreign goods more cheaply priced in the U.S. … I expect the export orders index to move even lower in the months ahead and the slow-growth U.S. economy to continue to limit imports.”


The Institute for Supply Management, formerly the Purchasing Management Association, began formally surveying its membership in 1931 to gauge business conditions.

The Creighton Economic Forecasting Group uses the same methodology as the national survey to consult supply managers and business leaders. Creighton University economics professor Ernie Goss oversees the report.

The overall index ranges between 0 and 100. Growth neutral is 50, and a figure greater than 50 indicates an expanding economy over the next three to six months.

Here are the state-by-state results for May:

Kansas: The Kansas overall index dropped below growth neutral to hit 49.7 in May, compared with 51.2 in April. Components of the index were new orders at 50.3, production or sales at 52.1, delivery lead time at 51.1, employment at 47.6 and inventories at 47.5. “Durable-goods manufacturers in the state, including agricultural machinery producers and aircraft parts manufacturers, are reporting downturns in economic activity,” Goss said. Nondurable-goods companies, such as food processors, “also signaled slower growth in the months ahead,” he said.

Arkansas: The May overall index slipped to 49.8 from 53.6 in April. Components of the index were new orders at 50.3, production or sales at 52.1, delivery lead time at 51.1, inventories at 47.6 and employment at 47.6. Goss said business activity slowed for both durable- and nondurable-goods manufacturers in the state.

Iowa: Iowa’s index fell to 50.4 from 53.3 in April. Components of the index were new orders at 51.0, production or sales at 52.9, delivery lead time at 51.8, employment at 48.3 and inventories at 48.2. “Durable-goods manufacturers continue to experience pullbacks in economic activity,” Goss said. Producers tied to agriculture and metal producers were reporting downturns in economic activity, he said, but also said nondurable-goods producers reported weak growth.

Minnesota: The state’s overall index slipped to 51.1 from 51.3 in April. Components of the index were new orders at 51.7, production or sales at 53.5, delivery lead time at 52.5, inventories at 48.8 and employment at 48.9. “Minnesota’s economy has expanded in 2015, but at a slower pace than for the same time period in 2014,” Goss said. “Our surveys over the past several months point to even slower, but positive, growth in the months ahead for the state.” Growth for durable-goods manufacturers will slow in the months ahead, spilling over into the broader state economy, he said.

Missouri: The overall Missouri index sank to 50.7 from 54.4 in April. Components of the index were new orders at 48.7, production or sales at 53.2, delivery lead time at 52.1, inventories at 48.5 and employment at 51.0. “Missouri’s economy has expanded in 2015, but at a slower pace than for the same time period in 2014,” Goss said. “Our surveys over the past several months point to even slower, but positive, growth in the months ahead for the state.”

Nebraska: For the 18th straight month, Nebraska’s overall index remained above growth neutral 50.0, though it sank to 51.1 in May from April’s 54.6. Components of the index were new orders at 51.7, production or sales at 53.6, delivery lead time at 52.5, inventories at 48.9 and employment at 49.0. “Nebraska manufacturing has weakened and will continue to weaken as a result of weaker farm income and a higher value of the U.S. dollar,” Goss said. “Unless the U.S. dollar weakens dramatically in the months ahead, the Nebraska economy is slated for slow growth through the third quarter of 2015,” he said.

North Dakota: North Dakota’s overall index fell in May to a regional low of 46.8 from April’s 51.6. Components of the overall index were new orders at 47.3, production or sales at 49.0, delivery lead time at 48.1, employment at 44.8 and inventories at 44.7. “Our survey is now picking up weakness linked to the energy sector for North Dakota,” Goss said. Durable-goods producers connected to energy are reporting declining economic conditions, he said. “Even though this weakness has yet to hit the broader North Dakota economy, our surveys indicate that it will spill over into the broader state economy in the months ahead,” Goss said.

Oklahoma: The Oklahoma overall index slumped below growth neutral in May, falling to 47.0 from 50.8 in April. Components of the overall index were new orders at 47.5, production or sales at 49.2, delivery lead time at 48.2, inventories at 44.9 and employment at 45.0. “Energy firms and manufacturing firms linked to energy have begun to pull back,” Goss said. That will spill over into the broader Oklahoma economy in the months ahead, he said.

South Dakota: South Dakota’s overall index has been above growth neutral 50.0 since December 2012. It dipped slightly last month but still registered a regional high of 54.1, compared with 54.2 in April. Components of the overall index were new orders at 54.7, production or sales at 56.7, delivery lead time at 55.6, inventories at 51.7 and employment at 51.8. “Manufacturing firms in the state are expanding at a solid pace. This has spilled over to other industries in the state, such as wholesale trade,” Goss said.