Report: Midwest Economy Expands Despite Tariff Concerns

by Associated Press  on Thursday, Nov. 1, 2018 10:35 am   2 min read

OMAHA, Neb. — The economy expanded in nine Midwestern and Plains states last month despite mounting concerns about tariffs and trade skirmishes, according to a report released Thursday.

The Mid-America Business Conditions Index slumped to 54.9 in October, from 57.5 in September , the report said. The October reading was the lowest since January 2017, but it also was the 23rd month in a row that the index has remained above growth neutral 50.0.

"The regional economy continues to expand at a healthy pace," said Creighton University economist Ernie Goss, who oversees the survey. "However, as in recent months, shortages of skilled workers remain an impediment to even stronger growth. Furthermore, supply managers are reporting mounting negative impacts from tariffs and trade skirmishes," he said.

Trade restrictions, expanding tariffs and rising short-term interest rates are likely to slow regional growth in the months ahead, Goss said.

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

Survey results cast a shadow on the October employment index, which dropped to 52.2 from 56.2 in September and 58.5 in August.

"Overall manufacturing employment growth in the region over the past 12 months has been very healthy at 2.4 percent, compared to a lower 2.2 percent for the U.S.," Goss said. "I expect this gap to close in the months ahead as regional job growth slows faster than national manufacturing job growth."

Economic optimism, as reflected by the October index, plummeted to a still strong 59.6 from September's 68.0.

"In terms of business confidence, rising trade tensions, tariffs, and interest rates have reduced economic optimism among supply managers in the region," Goss said.

The overall Arkansas index rose to 52.9 last month from September's 52.5. Index components were new orders at 56.5, production or sales at 53.4, delivery lead time at 57.9, inventories at 44.6 and employment at 51.9.

Arkansas' nondurable-goods manufacturers added 1,500 workers over the past 12 months for a 1.8 percent gain. Durable-goods producers boosted jobs by 800 for a 1.1 percent gain.

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