Midwest business survey predicts job cuts over next six months

Thursday, December 1, 2011 | 12:37 p.m. CST

OMAHA, Neb. — Job growth has slowed significantly in nine Midwest and Plains states, and many companies in the region expect further job cuts in the coming six months, according to a monthly survey of business managers released Thursday.

About 18 percent of survey respondents reported job reductions for November, said Creighton University economist Ernie Goss, who oversees the Mid-America business conditions index survey.

Business managers also were asked in the November survey about their hiring expectations for the next six months.

"Only 30 percent expect to add workers, while the remaining 70 percent anticipate layoffs or level employment for the first half of 2012," Goss said. "These expectations are somewhat more optimistic than December 2010, when 24 percent anticipated worker additions for the next six months."

The overall regional Business Conditions Index rose to 52.6 in November, jumping 2.7 percentage points from 49.9 in October.

Organizers said any survey score above 50 suggests economic growth in the next three to six months, while a score below 50 suggests economic decline.

States in the survey are Missouri, Arkansas, Iowa, Kansas, Minnesota, Nebraska, North Dakota, Oklahoma and South Dakota.

The prices-paid index, which tracks the cost of raw materials and supplies, rose to 60.9 from October's 56. On average, supply managers anticipate the cost of the goods they purchase will increase by 3.7 percent over the next six months, which would make for a 7.4 percent yearly increase. Twenty percent of supply managers said they expect costs to rise more than 6 percent over the six months.

"Last February when we asked the same question, supply managers expected annualized price growth of 8.8 percent," Goss said. "Thus, anticipated wholesale price growth has declined by 1.5 percentage points since February."

The report indicated business leaders surveyed remain pessimistic about economic prospects for the first half of 2012. The November business confidence index sank to 49.1 from October's already weak 49.5.

The inventory index climbed to 52.9 from October's 48.5. The export index rose to 52.1 from October's 50, while the import index rose to 49.5 from October's anemic 48.

The other components of the November index were:

  • New orders at 52, up from October's 51.2;
  • Production or sales at 52.4, up from October's 48.5;
  • Delivery lead time at 56.5, down from October's 57.9.
State-by-state breakdown: Missouri

The November index was unchanged at 47.3, below growth neutral. Components of the overall index were new orders at 45.3, production or sales at 47.1, delivery lead time at 54.6, inventories at 46.8 and employment at 42.8. "Durable-goods manufacturers reported solid business conditions for the month. However, this growth was more than offset by economic pullbacks among value-added service firms such as telecommunications," Creighton University economics professor Ernie Goss said.

Since bottoming out in Dec. 2010, Missouri has added almost 12,000 jobs, Goss said, but the state must add 97,000 more to reach pre-recession levels. "Our survey results over the last several months point to economic weakness for the next three to six months, outside of the durable-goods sector," he said.

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