Survey Shows Midwest Economic Recovery Continues

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A November survey of supply managers in nine Midwestern and Plains states suggests the region will continue the modest pace of its recovery in the months ahead, according to a report released Wednesday.

The Business Conditions Index for the Mid-America region rose to 55.9 last month from 52.3 in October.

November was the 12th consecutive month that the index has remained above growth neutral, the report said.

"Strength in the region's agricultural and energy sectors is spilling over into the rest of the area economy," said Creighton University economist Ernie Goss, who oversees the survey.

"For example, farmers have stepped up their buying of agricultural equipment, which has bolstered growth among the manufacturers and sellers of farm equipment and trucks," Goss said.

Unless the debt problems of Portugal, Ireland and Spain spill over into the rest of Europe, Goss said, he expects strong agricultural income to continue to drive the Mid-America economy forward.

A widening debt crisis would increase demand for U.S. dollars by investors seeking safe harbors for their money. But that rise in demand would make the dollar stronger and U.S. goods more expensive, Goss said. For example, a stronger dollar makes a shipload of Nebraska corn more expensive because it takes more euros to buy the U.S. dollars to buy the corn.

The survey and report use a collection of indexes ranging from zero to 100. Organizers say any score above 50 suggests economic growth in the next three to six months, while a score below 50 suggests a contracting economy. States in the survey are 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, organizers said. Over the past year, the Mid-America index usually exceeded the national reading.

The survey's index for economic optimism, which looks ahead six months, rose to 67.8 from 62.0 in October and 51.6 in September.

"This is the second straight significant increase in the confidence index," Goss said. "While the overall U.S. economy remains weak, as gauged by unemployment rates, individual firms in the Mid-America region are experiencing solid improvements in business conditions."

Those improving conditions are reflected by the regional jobs scene.

For the 11th month in a row, the survey's employment index remained above growth neutral. It hit 53.0 in November, compared with 50.6 in October. For November, 21.2 percent of firms surveyed reported increases in employment, while 15.3 percent reported decreases.

Other components of the November survey index:

— new export orders slipped to 50.8 from 51.9 in October;

— new import orders rose to 51.4 from 50.7 in October;

— wholesale prices came in at 64.7, down from 69.9;

— inventories soared to 59.7 from 48.3 in October;

— new orders hit 54.5, up from 50.0 in October;

— production or sales hit 56.8, up from 52.8;

— delivery lead time was 55.6, down from 59.7 in October.

___

Online:

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

Copyright 2010 The Associated Press.



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