Agriculture boosts Midwest, Plains economy in 2011
Tuesday, February 1, 2011
OMAHA, Neb. (AP) — The economy is gaining strength in nine Midwest and Plains states because global growth and continued low interest rates have provided a boost to agriculture and energy businesses, according to a new survey released Tuesday.
"The regional economy is beginning the year on a very healthy note," Creighton University economist Ernie Goss said. "Over the past year, farm commodity prices have risen by 18 percent. This rapid price growth is showing up in farmers' income and in industries tied to agriculture."
The overall Mid-America business conditions index rose for the fourth straight month, to 58.9 in January. That compares with 57.5 in December, 55.9 in November and 52.3 in October.
January was the 14th consecutive month that the index came in above growth neutral.
The monthly report, which is based on a survey of supply managers and business leaders, uses a collection of indexes that range from zero to 100. Any score above 50 suggests growth in that index over the next three to six months while a score below 50 suggests contraction.
January's overall score of 58.9 suggests economic growth in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota. The overall index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time.
Goss, who oversees the report, said the region's employment index improved to 56.3 in January from December's 51.1 and November's 53.
"The more dependent the area is on agriculture and energy, the stronger the new hiring," Goss said.
The prices-paid index, which tracks cost inflation, remained high at 84.2 in January. That was up from December's 81.1.
"Prices for raw materials, commodities and supplies are increasing at an unsustainable pace," Goss said.
Nevertheless, business leaders remain optimistic about the coming six months. The confidence index rose to 74.8 in January from December's 69.9 to hit its highest level since April 2004.
The inventory index fell to 55.8 in January from 64.4 in December.
The export index rose to 54.7 in January from December's 54.1 and November's 50.8. Goss said the weaker dollar is making U.S. goods cheaper abroad, which helps exports.
The import index also rose to 55.5 in January from December's 50.
Other components of January's overall index were:
— New orders rising to 60.2 from December's 58.2.
— Sales index up to 62.7 from 55.8.
— And delivery lead time rose to 59.5 from 57.9.
Creighton Economic Forecasting Group: http://www.outlook-economic.com