Business leaders optimistic about Midwest, Plains economy, despite signs of weak recovery

Those surveyed optimistic about Midwest economy

OMAHA, Neb. — Middle America’s business sector appears optimistic about the region’s economy over next six months, despite signs that suggest the economy will see a weak recovery in 2010, according to a survey of business leaders and supply managers in nine Midwest and Plains states released Monday.

The Business Conditions Index for the Mid-America region rose to 50.3 in December, compared with 47.5 in November.

The index ranges from zero to 100, with any score above 50 suggesting economic growth in the next three to six months. Conversely, a score below 50 suggests a contracting economy over the next three to six months.

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

Looking ahead six months, the December confidence index soared to 69.5 from November’s 61.1.

“While the labor market has yet to improve, the downturn in layoffs and stabilizing unemployment rates lifted the economic outlook of supply managers in the Mid-America region,” said Creighton University economist Ernie Goss, who oversees the survey.

Goss said that although the region’s overall job market has stabilized, the manufacturing sector is still losing jobs.

“Over the past year, the Mid-America region has lost more than 154,000 manufacturing jobs, or more than 10 percent of its manufacturing base,” Goss said. “Based on recent survey results, I expect the region to continue to lose manufacturing jobs even as the overall job market stabilizes.”

The regional employment index for December was 47.6, up from November’s 46.1. Eleven percent of supply managers reported job losses, while 16 percent indicated their firms reduced employment.

The prices-paid index, which tracks the cost of raw materials and supplies, moved came in at 65.2, down from November’s 68.

The survey’s trade numbers remained weak. New export orders inched higher to 51.9 from 50 in November, while imports rose to 48.5, from 47.8 in November.

“The weaker U.S. dollar making imported goods more expensive is contributing to the decline in goods purchased from abroad and rising inflationary pressures,” Goss said.

Other components of December’s overall index:

— New orders increased 55.5, up from 47.3 in November.

— Production or sales increased to 54.4 from November’s 46.7.

— And delivery lead time jumped to 54.7 from November’s 53.9.

On the Net:

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