Midwest Economy: North Dakota Tops Region in Job Growth

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 of the July survey in the Mid-America region:

Arkansas: The state’s overall index dropped for the fourth straight month, to 50.5 from 55.9 in June and 56.8 in May. Components of the overall index for July were new orders at 42.6, production or sales at 53.3, delivery lead time at 62.9, inventories at 43.8 and employment at 49.6.

“Durable-goods manufacturers in Arkansas are adding jobs and increasing the hours worked of current employees,” Goss said in a news release. “This is pushing the state economy forward. However, that push has weakened over the past several months. As a result, I expect second-half job growth in the state to decline from its current annualized rate of over 2 percent to just over 1 percent.”

Iowa: Iowa’s overall index remained above growth neutral for the seventh month in a row. The index slipped to a regional high of 68.2 in July from 70.1 in June and 70.3 in May. Components of the overall index were new orders at 81.0, production or sales at 79.2, delivery lead time at 57.7, employment at 62.4 and inventories at 60.7.

“Iowa durable-goods producers are reporting upturns in hiring and hours worked for current employees. This is now pushing the overall state economy forward,” Goss said. “I expect second-half job growth in the state to match first-half annualized growth of 2.3 percent.”

Kansas: The overall dropped below growth neutral, to 49.3 in July from 51.1 in June. Components of the overall index were new orders at 44.0, production, or sales, at 49.1, delivery lead time at 59.0, employment at 53.2 and inventories at 41.4. Kansas was the only state to drop below growth neutral in July. Kansas’ durable-goods producers have reported less economic activity, which Goss said is spilling over into the overall economy.

“As a result, I expect overall job growth in the second half of 2010 to decline from current annualized growth of 1.4 percent to roughly half that pace,” he said.

Minnesota: The overall Minnesota index slipped to 64.4 in July from 65.5 in June. It was the 12th month in a row that Minnesota’s index came in above growth neutral. Components of the overall index were new orders at 64.6, production, or sales, at 65.9, delivery lead time at 60.8, inventories at 63.6 and employment at 67.1. Minnesota manufacturers say business activity is growing, which Goss said is affecting the rest of the state economy.

“As a result, I expect second-half job growth in Minnesota to match annualized growth of 2 percent in the first half,” he said.

Missouri: For the 13th month in a row, Missouri’s overall index remained above growth neutral, although it dropped to 53.8 in July from 58.5 in June. Components of the overall index were new orders at 53.7, production, or sales, at 56.4, delivery lead time at 53.8, inventories at 52.2 and employment at 52.8.

“For the first half of 2010, Missouri’s unemployment rate declined by one-half of a percentage point and the state added almost 11,000 jobs,” Goss said. “Based on our survey results, I expect the jobless rate to change very little in the second half of 2010, even as Missouri doubles its rate of job growth.”

Nebraska: For the 11th straight month, Nebraska’s overall index came in above growth neutral, even though it dropped. It hit 62.9 in July, compared with 65.3 in June. Components of the overall index were new orders at 66.9, production, or sales, at 72.0, delivery lead time at 62.0, inventories at 55.1 and employment at 58.6.

“In recent months, growth among durable-goods producers has more than offset pullbacks among nondurable-goods manufacturers, especially food producers,” Goss said. “I expect the pace of job growth to decline to an annualized rate of slightly over 1 percent with the unemployment rate stabilizing at its current level,” he said. In its latest report on unemployment, Nebraska estimated a rate of 4.8 percent in June.

North Dakota: The state’s overall rate rose to 57.6 in July from June’s 54.6. Components of the overall index were new orders at 47.8, production, or sales, at 53.4, delivery lead time at 66.4, employment at 64.6 and inventories at 55.6.

“For 2010, North Dakota has enjoyed the best job market in the nine-state region, with the state’s jobless rate declining … and the economy adding jobs at an annualized rate of 2.8 percent,” Goss said. “While I expect North Dakota to continue to grow for the second half of 2010, the gap between North Dakota and the region will narrow as the state’s unemployment rate plateaus and job growth slows to a still healthy 1.5 percent annualized rate,” he said.

Oklahoma: For the seventh month in a row, Oklahoma’s overall index came in above growth neutral. It hit 61.6 in July, compared with 67.4 in June. Components of July’s overall reading were new orders at 63.5, production, or sales, at 54.7, delivery lead time at 72.0, inventories at 54.7 and employment at 52.5.

“Oklahoma’s job growth has been well above the pace of the nation and the region,” Goss said. “I expect the gap between Oklahoma and the nation to narrow in the second half as expansions from the significant inventory buildup wanes,” he said.

South Dakota: The state’s overall index slipped to 66.6 from 66.8 in June. Components of the overall index for July were new orders at 70.8, production, or sales, at 69.8, delivery lead time at 66.5, inventories at 63.6 and employment at 62.5. Goss said the state’s manufacturers are continuing to expand their activity, which has helped the rest of the South Dakota economy.

“I expect South Dakota to continue to add jobs at an annualized rate of slightly over 1 percent in the second half of 2010,” he said.