Survey: More slow economic growth ahead in Midwest
Saturday, March 2, 2013
OMAHA, Neb. (AP) — A monthly economic survey index for nine Midwest and Plains states dipped last month, suggesting only slow growth for the region over the next three to six months.
The Mid-America Business Conditions index hit 53.1 in February, compared with 53.2 in January and 49.5 in December, according to a report released Friday.
Creighton University economist Ernie Goss, who oversees the survey, said the region will remain on a sluggish course.
"Even though the housing sector is clearly getting back on its feet," Goss said, "manufacturing, especially manufacturing connected to global markets, continues to restrain overall growth for the region and nation."
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.
The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
Looking ahead six months, the February index for business confidence sank to 50.6 from January's 56.6.
The supply managers were asked how the automatic federal budgets cuts scheduled to take affect after Friday's deadline in Washington would affect sales. More than 35 percent said they expected the cut in federal spending to cost their company some sales.
Here's a look at the other components of the overall index:
— Exports remained weak, coming in at 49.2 in February, compared with 45.3 in January.
— Imports improved to 53.7 from 50.7 in January.
— Inventories dropped to 52.2 from 55.0 in January.
— Production or sales improved to 55.5 last month, compared with 53.9 in January.
Creighton University economic reports: http://www.outlook-economic.com
The Institute for Supply Management, formerly the Purchasing Management Association, began formally surveying its membership in 1931 to gauge business conditions.
The Creighton Economic Forecasting Group uses the same methodology as the national survey to consult supply managers and business leaders. Creighton University economics professor Ernie Goss oversees the report.
The overall index ranges between 0 and 100. Growth neutral is 50, and a figure greater than 50 indicates an expanding economy over the next three to six months.
Here are the state-by-state results for February:
Arkansas: The February overall index for Arkansas dipped to 51.1 from 52.3 in January. Components of the index were new orders at 44.5, production or sales at 49.0, delivery lead time at 62.5, inventories at 50.0 and employment at 49.4. The state's unemployment rate has dropped seven-tenths of a percentage point over the past year. "However, a large part of this decline was the result of approximately 23,000 workers leaving the workforce," Goss said. "Our surveys point to a continuation of this weak hiring market, especially for smaller manufacturers as they struggle with impending mandates from health care reform."
Iowa: The state's overall index jumped to a regional high of 64.6, compared with 59.8 in January. Iowa's overall index has remained above growth neutral for 38 straight months. Components of the index for February were new orders at 70.7, production or sales at 71.1, delivery lead time at 58.4, employment at 62.5 and inventories at 60.3. For the first time since the economic recovery began in 2009, Iowa's unemployment rate has moved below 5 percent, and businesses tied to energy and agriculture continue to experience healthy growth, Goss said. "Our surveys indicate that economic growth for Iowa will remain healthy for the next three to six months," he said.
Kansas: The overall index for Kansas rose above growth neutral to 54.1 last month from January's 48.3. Components of the index were new orders at 57.2, production or sales at 56.2, delivery lead time at 50.5, employment at 49.7 and inventories at 56.7. The state's unemployment rate has declined by a full percentage point over the past year, but Kansas also lost more than 7,000 jobs and about 22,000 workers left the state's labor market. "Our surveys over the past several months point to sluggish, but positive business and job growth for the next three to six months," said Goss.
Minnesota: Minnesota's overall index dipped 52.0 in February from 52.6 in January. Components of the index were new orders at 44.8, production or sales at 50.5, delivery lead time at 56.2, inventories at 52.7 and employment at 51.7. Over the past year, Goss said, the state's unemployment rate has dropped about half a point. At the same time, job growth has been sluggish "Our surveys over the past several months point to a continuation of this trend with very slow job growth," Goss said. Minnesota firms depending heavily on exports have been harmed by global economic problems. But, he said, firms linked to agriculture continue to experience healthy growth.
Missouri: The state's overall index rose to 52.1 in February from 51.2 in January. Components of index were new orders at 51.8, production or sales at 50.9, delivery lead time at 53.8, inventories at 47.1 and employment at 57.0. Missouri's unemployment rate continues to move lower and is down 3 percentage points since the national economic recovery began in 2009. Heavy or durable-goods manufacturers in the state, such as metal producers, continue to experience healthy growth, Goss said, while nondurable-goods companies are encountering downturns in economic activity. He said he expects Missouri's economic growth will slow but remain positive over the next three to six months.
Nebraska: Nebraska's overall index has dropped under growth neutral, to 48.7 in February from 50.5 in January. December's figure was 48.4. Components of the index were new orders at 50.2, production or sales at 47.5, delivery lead time at 48.8, inventories at 52.8 and employment at 44.3. "Contrary to other states in the region, Nebraska's unemployment rate has declined and the labor force has expanded since the national expansion began in 2009. However, according to our surveys over the past several months, this very positive trajectory is now ending with slow to no growth projected for the next three to six months," Goss said.
North Dakota: The state's overall index rose to 54.4 last month from January's 53.8. Components of the overall index were new orders at 62.1, production or sales at 69.5, delivery lead time at 50.4, employment at 52.8 and inventories at 37.1. "As a result of very strong economic growth, North Dakota's labor force participation rate — the share of the population that is working or looking for work — is the highest in the nation and its unemployment rate is the lowest in the nation," Goss said. "Thus, companies in the state are having increasing difficulty recruiting additional workers even as their new orders continue to expand at a very healthy pace. As a result, labor shortages are the chief inhibitor to more robust growth in North Dakota in the months ahead," he said.
Oklahoma: Oklahoma's overall index dipped slightly, to 52.5 last month from 53.8 in January. Components of the February survey were new orders at 51.7, production or sales at 48.4, delivery lead time at 49.0, inventories at 62.4 and employment at 51.0. Since the recovery began in 2009, Oklahoma's unemployment rate has dropped 2 percentage points and the state's labor force has expanded by almost 40,000 workers. Durable-goods manufacturers such as metal product producers are reporting healthy growth, Goss said, while nondurable-goods manufacturers, including food processors, are reporting slowdowns. "Based on our survey results over the past several months, Oklahoma growth will continue on a positive but slower pace," he said.
South Dakota: The state's overall index dropped to 52.5 in February, compared with 53.5 in January. Components of the index were new orders at 47.9, production or sales at 55.2, delivery lead time at 49.1, inventories at 52.4 and employment at 49.2. Since the recession ended in 2009, South Dakota's unemployment rate has declined by almost a percentage point. Goss said manufacturing growth has been an important factor contributing to the lower jobless rate, and surveys indicate that overall and manufacturing growth will continue to be positive but slower.