September survey for 9 Midwest, Plains states suggests regional economy is on the mend

Midwest economic survey shows some improvement

OMAHA, Neb. — A September survey of supply managers in nine Midwest and Plains states suggests improving economic conditions, according to a report released Friday.

The Business Conditions Index for the Mid-America Region rose for the first time since May. The increase was slight, to 56.3 from 55.8 in August. It was the 10th straight month the regional index had remained above growth neutral.

Survey organizers said the results likely mean economic conditions will brighten in the months ahead, with little chance of a double-dip recession.

The survey and report use a collection of indexes ranging from zero to 100. Any score above 50 suggests economic growth in the next three to six months, while a score below 50 suggests a contracting economy. States in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Creighton University economics professor Ernie Goss, who oversees the report, said the survey results during the past year “are similar to that expected from exiting a recession.”

But, in a note of caution, Goss said U.S. workers are facing a tax increase on Jan. 1 that would hinder economic growth in the U.S. and the region.

Congress has been debating an extension of income-tax cuts for families making less than $250,000 and individuals making less than $200,000. Other tax cuts also are being debated.

The survey’s index on economic optimism, which looks ahead six months, dipped to 51.6 in September from 52.4 in August.

Since April, the regional confidence index has slipped, Goss said.

“The level of economic uncertainty clearly influenced the economic outlook of supply managers,” he said.

The survey’s employment index also slipped in September, to 53.2 from 55.2 in August and 58.8 in July. In September, 22.3 percent of those surveyed reported increases in employment and 16 percent reported decreases.

Since the recession officially ended in June 2009, Goss said, the region has added fewer than 24,000 jobs.

“In terms of jobs, I do not expect the region to be back to pre-recession levels until the first quarter of 2012,” he said.

The supply managers were asked an extra question in September: What are your expectations for holiday buying?

The report said 19.5 percent of those who responded expected holiday sales to grow more than 5 percent, while 10.3 percent expected holiday sales to drop more than 5 percent.

Other components of the September overall index:

— wholesale prices at 71.1, up from 64.6 in August;

— inventories rose to 56.3 from 51.9 in August;

— trade dipped to 50.0 from 51.9 in August;

— new orders at 56.0, up from August’s 53.6;

— production or sales at 57.9, up from 56.5 in August;

— delivery lead time at 58.4, down from August’s 61.7.

Online:

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