OMAHA, Neb. – A monthly survey of business leaders suggests the economy will continue slowing in nine Midwest and Plains states, in part because of manufacturing weakness, according to a report released Tuesday.
The Mid-America Business Conditions Index report said the overall economic index for the region dropped to 43.8 in October from September’s 45.5. It’s the fourth straight month the index has registered below growth neutral 50.0.
“Even with oil prices hovering around $50 per barrel for the month, weakness among manufacturers linked to agriculture and energy continue to weigh on regional economic conditions,” said Creighton University economist Ernie Goss, who oversees the survey. “Due to the heavy dependence of the region on these two sectors, I expect the regional economy to continue to underperform the national economy. Despite the decline in manufacturing, the nonmanufacturing sector of the regional economy is expanding, albeit at a slow pace.”
The survey results are compiled into a collection of indexes ranging from zero to 100. Survey organizers say any score above 50 suggests growth in that factor. A score below that suggests decline. The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The regional employment gauge reflected the loss of manufacturing jobs in the nine-state region. The sector’s survey index for October declined to 44.4 from September’s 46.8.
“The growth gap between regional manufacturing and nonmanufacturing remains wide,” Goss said.
He added that U.S. Bureau of Labor Statistics data indicate the region’s manufacturing sector lost almost 19,000 jobs, a 1.4 per cent decline, over the past year, while regional nonmanufacturing sectors added almost 104,000 jobs, an increase of 1 per cent.
Looking ahead six months, economic optimism, as captured by the October business confidence index, slumped to 39.7 last month from 48.5 in September.
“Global economic uncertainty and weakness in the region’s agricultural and energy sector are weighing on the business economic outlook of supply managers,” Goss said.