Survey: Midwest Economy Shows Modest Growth Trends

Business conditions in the Midwest are generally on an upward swing, according to a survey of supply managers and business leaders in the region.

The Creighton Economic Forecasting Group, directed by Creighton University economics professor Ernie Goss, gauges business conditions using an index that 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.

The March survey of the Mid-America regions shows most states are experiencing modest growth trends.

Following state-by-state results of the March survey:

Arkansas: The state’s Business Conditions Index for March rose to 57.3 from 52.1 in February. Components of the overall index were new orders at 46.8, production or sales at 68.4, delivery lead time at 61.9, inventories at 51.1 and employment at 58.5.

“Based on our survey of supply managers in Arkansas over the past several months, I expect job gains for the second quarter of 2010,” Goss said. “However, the increases will be very modest, with unemployment rates remaining above 7 percent for the rest of 2010 as discouraged workers re-enter the work force.”

Iowa: The state’s overall index jumped to 63.5 from 58.2 in February and 52.1 in January. Components of the overall index were new orders at 74.3, production or sales at 73.8, delivery lead time at 60.7, employment at 57.1 and inventories at 51.7.

“Based on our survey of supply managers in Iowa over the past several months, I expect manufacturing and overall job gains for the first and second quarters of 2010,” Goss said. “However, the increases will be very modest, with unemployment rates remaining above 6 percent for the rest of 2010, as discouraged workers re-enter the work force.”

Kansas: The overall index rose for the fifth month in a row, hitting 54.1 in March, compared with 50.8 in February. Components of the overall index were new orders at 58.4, production, or sales, at 51.9, delivery lead time at 65.1, employment at 42.4 and inventories at 53.3.

Goss said he expects job gains during the second quarter of 2010 in Kansas. But he said those increases will be modest, and he expected that unemployment rates will stay above 6 percent for the rest of 2010.

Minnesota: The state’s overall index rose to 62.5 from a revised 62.3 for February and 51.4 for January. It was the eighth month in a row that Minnesota’s index came in above growth neutral. Components of the overall index were new orders at 75.5, production, or sales, at 73.8, delivery lead time at 63.4, inventories at 43.9 and employment at 55.8. Goss said he expects job gains for the first and second quarters of 2010.

“However, the increases will be somewhat modest, with unemployment rates remaining above 7 percent for the rest of 2010 as discouraged workers re-enter the work force,” Goss said.

Missouri: For the ninth month in a row, Missouri’s overall index came in above growth neutral. It rose to 58.8 in March from 55.5 in February. Components of the overall index were new orders at 62.4, production, or sales, at 62.9, delivery lead time at 54.5, inventories at 58.9 and employment at 51.4.

Goss forecasts job gains for the first and second quarters of 2010 in Missouri. But he said those increases will be modest, with unemployment rates remaining above 8.5 percent for the rest of 2010.

Nebraska: The state’s overall index came in above growth neutral for the seventh month in a row. The index rose to 63.3 in March from 58.8 in February and 54.2 in January. Components of the overall index were new orders at 68.4, production, or sales, at 67.5, delivery lead time at 61.7, inventories at 57.8 and employment at 61.1. Goss said he expects Nebraska job gains in the second quarter of 2010.

“However, the increase will be very modest, with unemployment rates remaining above 4.5 percent for the rest of 2010 as discouraged workers re-enter the work force,” Goss said.

North Dakota: The state’s overall index remained below growth neutral in March but rose a point, to 49.3 from 48.3 in February. Components of the overall index were new orders at 35.1, production, or sales, at 55.0, delivery lead time at 50.4, employment at 54.4 and inventories at 51.6.

Goss said he expects modest job gains for the second quarter of 2010. But he also said he expects North Dakota’s unemployment rate to stay above 4 percent for the rest of the year.

Oklahoma: For the third month in a row, Oklahoma’s overall index came in above growth neutral. It jumped to 66.5 from 52.3 in February and 54.5 in January. Components of March’s overall reading were new orders at 67.4, production, or sales, at 68.3, delivery lead time at 72.2, inventories at 58.4 and employment at 66.4.

“Based on our survey of supply managers in Oklahoma over the past several months, I expect job gains for the second quarter of 2010,” Goss said. “However, the increase will be modest, with unemployment rates remaining above 6.5 percent for the rest of 2010.”

South Dakota: The state’s overall index rose to a regional high of 70.7 in March from 61.4 in February and 54.4 in January. Components of the overall index were new orders at 86.6, production, or sales, at 79.3, delivery lead time at 53.3, inventories at 69.1 and employment at 65.1.

Goss said he expects modest job gains for the second quarter of 2010 and that South Dakota’s unemployment rate will remain above 4.5 percent for the rest of 2010.

Creighton Economic Forecasting Group: http://www.outlook-economic.com