Tariffs and flooding have slowed economic growth in Nebraska, Iowa

Flooding and trade issues have pushed regional manufacturing employment back to December 2018 levels.

Tariffs and flooding have slowed economic growth in nine Midwest and Plains states, according to a Monday report on a survey of business supply managers.

The Mid-America Business Conditions Index dropped to 54.3 in May from 55.9 in April. The figure was 58.2 in March. It was the second straight decline in the overall index, but the 30th straight month that the nine-state index has remained above growth neutral 50.0.

The survey results are compiled into a collection of indexes ranging from zero to 100. Survey organizers say any score above 50 suggests growth. A score below that suggests decline.

“The regional economy continues to expand at a positive pace,” said Ernie Goss, director of Creighton University’s Economic Forecasting Group, who oversees the survey. “However, tariffs and flooding across several states pulled the overall index below growth neutral for four states: Iowa, Nebraska, North Dakota and Oklahoma.

“I expect the latest announced tariffs against Mexico, if implemented, to push more Mid-America states into job-loss territory in the months ahead.”

Flooding and trade issues have pushed regional manufacturing employment back to December 2018 levels, Goss said.

“A significant boost in inventories for the first quarter was the prime factor pushing the U.S. GDP growth to 3.1 percent,” Goss said. “I expect sinking inventories to weigh on both regional and U.S. growth for the second quarter 2019.”

Nebraska’s overall index dropped below growth neutral in May, hitting 48.9, compared with April’s 53.8. Index components were new orders at 53.9, production or sales at 52.5, delivery lead time at 47.9, inventories at 43.4 and employment at 46.8.

“Durable-goods producers in the state, including agriculture equipment manufacturers, experienced pullbacks for the month,” he said. Food processors and other nondurable-goods producers also saw slowdowns.

In Iowa, the overall index fell below growth neutral for a second straight month. It dropped to 47.0 from 48.9 in April. Index components were new orders at 49.9, production or sales at 47.3, delivery lead time at 43.3, employment at 47.3 and inventories at 44.3. “Flooding, especially in western Iowa, stymied manufacturing activity in the state,” he said.

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