Report Cites December Rise in Midwest Economic Conditions

by Associated Press  on Tuesday, Jan. 2, 2018 7:02 am   2 min read

OMAHA, Neb. — A business conditions index for nine Midwest and Plains states rose over the past month, pointing to continuing improvement in regional economic conditions, an economist said in a report released Tuesday.

The Mid-America Business Conditions Index climbed to 59.0 from 57.2 in November, the report said. The October figure was 58.8.

"Although the inflation gauge is elevated, I would characterize the region as having a 'goldilocks' economy," said Creighton University economist Ernie Goss, who oversees the survey. "That is not so hot as to push the Federal Reserve to raise interest rates at a stepped-up pace, but not so cool as to slow employment gains."

The regional wholesale inflation gauge cooled to a still strong 71.3 from November's 71.4, reflecting the regional inflationary pressures.

"Even though both our regional wholesale inflation index and the U.S. inflation gauge are elevated, I expect the Federal Reserve to forgo a short-term interest rate hike at the next meeting of their rate-setting committee on Feb. 1." Goss said. But he also said he expected a quarter-point increase at the March 15 meeting.

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

The December overall index for Arkansas jumped to 56.8 from November's 51.9. Components of the index were new orders at 70.1, production or sales at 56.3, delivery lead time at 56.7, inventories at 48.6 and employment at 52.3.

Down the Road

Looking ahead six months, the December business confidence index rose to 73.2 last month from 71.9 in November.

"Healthy profit growth, still low interest rates and the recently passed tax reform package pushed business confidence to its highest level since January 2011," Goss said.

The regional jobs picture showed improvement as well, as the December employment index climbed to 57.7, compared with 53.6 in November.

"Over the past 12 months, the regional manufacturing sector has added approximately 29,000 jobs, a 2.1 percent expansion," Goss said. "This annual regional manufacturing growth rate significantly exceeds the 1.5 percent growth for U.S. manufacturing."

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