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August Survey Suggests Economic Doldrums Ahead for Midwest

2 min read

OMAHA, Neb. – A survey conducted in August suggests there will be little or no economic growth over the next three months in a nine-state region of the Midwest and Plains, according to a report released Tuesday.

The overall Mid-American Business Conditions Index dropped to 49.6, compared with 50.6 in July, the report said.

Creighton University economist Ernie Goss, who oversees the survey, said Arkansas, Iowa, Minnesota, Missouri and South Dakota companies reported growth last month, but businesses in Kansas, Nebraska, North Dakota and Oklahoma reported less economic activity.

Economic optimism for the next six months, as reflected by August business confidence index, plunged to 47.7 from 52.4 in July.

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

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

The regional employment gauge rose last month to 52.0 from 50.0 in July. Since January, region has added more than 57,000 nonfarm jobs, according to U.S. Bureau of Labor Statistics data. But the region also lost almost 9,000 manufacturing jobs during over the same period, Goss said.

“Since our survey oversamples manufacturing firms, it is not surprising that our overall index has weakened significantly for states with a large agriculture and energy presence,” he said.

Included in the August survey was a question about how a possible Federal Reserve rate hike in September would affect their companies.

“One-fourth, or 25 percent, expect negative impacts from a rate increase, 5 percent anticipate a positive impact, while the remaining 70 percent expect little or no effect from an interest rate hike in September,” said Goss, who added that the results differed little from July, when the same question was asked.

In Arkansas, the state’s overall index slipped to 52.1 from July’s 52.4. Components of the index were:

  • new orders at 55.7
  • production or sales at 49.8
  • delivery lead time at 56.2
  • inventories at 43.7
  • employment at 54.6

According to the U.S. Bureau of Labor Statistics, Arkansas has lost 1.3 percent of its manufacturing job base since January. The strong dollar, which has restrained sales abroad, weighed on the state’s durable-goods sector in terms of jobs, Goss said, while the nondurable-goods sector experienced slim job gains.

“Our survey results over the past several months point to positive but weak gains for the overall state economy for the rest of 2015,” he said.

(Copyright 2015 The Associated Press. All rights reserved. This material may not be published, rewritten, broadcast or distributed.)

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