Midwest Economic Index Rises Slightly

December 4, 2012

A monthly economic index report suggests an economic slump will continue over the next three to six months for nine Midwest and Plains states.

The Mid-America Business Conditions index rose slightly in November to a weak 48.0 from 46.5 in October. The figure was 50.4 in September.

The survey of business leaders and supply managers uses a collection of indexes ranging from zero to 100. Survey organizers say any score above 50 suggests growth while a score below 50 suggests decline for that factor.

Creighton University economist Ernie Goss oversees the survey, and he says it is tracking “economic weakness, particularly for nondurable-goods producers.”

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

Arkansas: The November overall index rose to a weak 45.4 from 42.3 in October. Components of the index were new orders at 39.6, production or sales at 41.9, delivery lead time at 50.1, inventories at 50.1 and employment at 45.0. Arkansas has lost manufacturing jobs in 2012. However, said Goss, the losses in the state’s nondurable-goods sector were almost equal to the gain for the state’s durable-goods producers. “Our November survey indicates that pullbacks among nondurables continue to outweigh advances for durable-goods manufacturers,” he said.

Iowa: Iowa’s overall index dropped for the fifth month in a row, down to 52.6 from October’s 54.2. The overall index has remained above growth neutral for the past 35 months, however. Components of the index for November were new orders at 53.5, production or sales at 45.2, delivery lead time at 55.8, employment at 56.9 and inventories at 51.4. “For 2012, Iowa has bucked the trend in the region by adding both durable- and nondurable-goods manufacturing jobs. Our recent surveys continue to point to growth for both manufacturing and nonmanufacturing in the state, but at a slower pace,” Goss said.

Kansas: The state’s overall November index rose to 51.3 from 47.9 in October. Components of the index were new orders at 57.8, production or sales at 49.3, delivery lead time at 53.8, employment at 51.9 and inventories at 43.6. For 2012, Kansas has slowly added manufacturing jobs. Gains were greater for durable-goods producers, Goss said, because declines for food processors pulled the nondurable-goods sector numbers lower. Higher agriculture commodity prices will likely continue to weigh on food processors as the state economy slowly expands, he said.

Minnesota: The overall index for Minnesota came in below growth neutral for the fifth straight month, but it rose to 48.4 from 47.1 in October. This is the first time since the recession that the state’s overall index has been below 50 for five straight months. Components of the index from the November survey were new orders at 36.9, production or sales at 40.5, delivery lead time at 63.6, inventories at 48.2 and employment at 52.8. “Over the last several months we have been recording losses, albeit small, across the manufacturing sector,” Goss said. “Businesses linked to construction are reporting improving economic conditions. Our surveys point to slightly negative economic and job growth for the state over the next three to six months,” he said.

Missouri: The state’s overall index slipped to 47.2 from 50.0 in October. Components of the survey were new orders at 41.6, production or sales at 45.8, delivery lead time at 55.5, inventories at 41.9 and employment at 51.5. “For 2012, job losses in Missouri’s nondurable-goods sector more than offset increases for durable-goods producers in the state. Our recent surveys of supply managers in the state show a continuation of this trend with overall job growth likely to hover slightly below zero in the next three to six months,” said Goss.

Nebraska: Nebraska’s overall index remained below growth neutral for the fourth time in the past five months, but it rose to 47.3 in November from 45.5 in October. Components of the index were new orders at 47.6, production or sales at 45.5, delivery lead time at 49.2, inventories at 49.0 and employment at 45.3. “Improving economic conditions in Nebraska’s construction industry are pushing growth higher for firms with linkages to this industry,” Goss said. However, manufacturing’s weakness more than offset nonmanufacturing growth. Surveys over the past several months point to slightly negative job and economic growth for Nebraska over the next three to six months, he said.

North Dakota: The state’s overall index once again was the regional high but slid to 58.1 from October’s 64.1. Components of the overall index for November were new orders at 59.4, production or sales at 72.8, delivery lead time at 53.5, employment at 51.4 and inventories at 53.1. “Our surveys over the past several months point to positive but somewhat slower growth for the state over the next three to six months. Housing and labor shortages are reported by supply managers as restraining more robust growth,” Goss said.

Oklahoma: Oklahoma’s overall index sank to 56.1 from October’s 63.3. Components of the November survey were new orders at 63.6, production or sales at 62.4, delivery lead time at 42.0, inventories at 60.5 and employment at 52.1. “Growth stemming from a very strong energy sector continues to push state economic growth higher,” Goss said. Manufacturing continued to expand at a solid pace. “Our surveys over the past several months project healthy but somewhat slower growth for the next three to six months,” Goss said.

South Dakota: For a fifth straight month, South Dakota’s overall index remained below growth neutral. However, it rose to 48.9 from 45.3 in October. Components of the index for November were new orders at 60.7, production or sales at 53.8, delivery lead time at 55.0, inventories at 28.8 and employment at 46.0. “For 2012, South Dakota added manufacturing jobs at a very slow but positive pace. Our surveys over the past several months indicate that the growth rate in both manufacturing and nonmanufacturing will move to slightly negative for the next three to six months,” said Goss.

Topics Kansas Iowa Oklahoma Manufacturing Minnesota Arkansas Missouri

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