OMAHA, Neb. — The recession will worsen and unemployment rates will likely soar in nine Midwest and Plains states over the next few months, but a new survey of business leaders suggests the region may fare better than the nation as a whole.
The overall index for the region's Mid-America Business Conditions survey fell to 33 in December from November's record low of 37.8. Any score below 50 on the index, which ranges between 0 and 100, indicates a contracting economy over the next three to six months.
"December's employment reading was the weakest that we have recorded since we began the study in 1994," Creighton University economics professor Ernie Goss said. "Job cuts were recorded across the broad sectors of durable and nondurable manufacturing as well as value-added services. I expect regional job losses to mount in the months ahead."
The December employment index slid to 34.5 from November's 39 and October's 47.4.
Goss, who oversees the survey, said the recession will be worse than the nation's last one, in 2001, but he expects the region to fare better than the nation during the downturn.
The survey includes Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The region will likely see prices fall during the first half of 2009, Goss said. The prices-paid index, which tracks the cost of supplies and raw materials, dropped to a record low of 33 from November's 49.6 and October's 61.6.
"The global economic downturn has produced a very rapid slide in prices," Goss said.
Despite all the negative economic news, business leaders in the region appeared slightly more optimistic about the next six months. But even though December's confidence index climbed to 25.6 from November's 22.4, the score remained well below 50.
Trade numbers remained weak in December with a record low export index of 27.5. That's down from November's 36.8. The import index climbed to 43.8 in December from November's record low of 38.6.
"The global economic slowdown is putting significant downward pressure on exports, just as the U.S. economic recession is curbing imports," Goss said.
Other components of December's overall index were:
- New orders fell to 26.8 from November's 30.4.
- Production slid to 29 from November's 35.4.
- Inventories at 37.3, down from 45.
- And delivery lead time at 47.4, down from 50.2.
Goss and the Creighton Economic Forecasting Group have conducted the monthly survey since 1994.
The Institute for Supply Management, formerly the Purchasing Management Association, began to formally survey its membership in 1931 to gauge business conditions. The Creighton Economic Forecasting Group uses the same methodology as the national survey.