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Survey: Economy shows recovery in Midwest, Plains

Thursday, October 1, 2009 | 12:09 p.m. CDT; updated 2:08 p.m. CDT, Thursday, October 1, 2009

OMAHA, Neb.— The economy appears to be on the mend in nine Midwest and Plains states and may even be growing again, according to a survey of supply managers and other business executives released Thursday.

The Business Conditions Index for the mid-America region grew to 56.2 in September, compared with 48.4 in August and 51.7 in July. A score above 50 suggests economic growth in the next three to six months.

"This month's large bounce is a welcome surprise and further evidence that the economic recovery is under way," said Creighton University economist Ernie Goss, who oversees the monthly survey. "However, the volatility of the index over the past several months points to the fragility of the economic upturn."

The survey offers some good jobs news because the employment index was in positive territory for the first time since March 2008. The September employment index climbed to 52.1, compared with 44.2 in August and 43 in July.

"Our survey indicates that the rate of job losses will diminish in the months ahead. I think the worst of the job losses are behind us for most states in the region," Goss said. "However, any job gains are likely to be very modest until well into 2010."

Government data shows that the region has lost nearly 400,000 jobs, or about 3 percent of its employment, since September 2008.

The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Respondents are extremely optimistic about the next six months. The confidence index soared to 73.4 in September from an already strong 63.1 in August.

"This is the first time since the recession began that positive reports of current economic conditions have mirrored the positive outlook," Goss said.

The supply managers surveyed reported increasing inflation in the cost of raw materials and supplies. The prices-paid index grew to 68.1 in September from 66.9 in August and 61.5 in July.

The survey's export order index grew to 54.6 in September from 44.7 in August. And the import index grew to 56 in September from 47.5 in August.

The September inventory index rose to 43.5, compared with 39.8 in August, suggesting that businesses are still reducing inventory but at a slower pace.

Goss said his survey has not shown any sign in the past year of businesses restocking their inventories of raw materials and supplies.

"I do expect inventory replenishments in the final quarter of 2009 to further stimulate the regional economy," Goss said.

Other components of September's overall index:

— New orders increased to 64.5 from 50 in August.

— Production or sales grew to 66 from 53 in August.

— And delivery lead time declined to 54.8 from 54.9 in August.

 


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