An August survey of business supply managers suggested slow or no economic growth over the next several months in nine Midwest and Plains states, in part because of trade skirmishes, a report said Tuesday.
The Mid-America Business Conditions index dropped below growth-neutral in August to hit 49.3, compared with 52.0 in July. The index had remained above growth neutral for 32 straight months, the report said.
“Weakness in the region’s farm and manufacturing sectors produced by tariffs and a global economic slowdown pulled regional growth below that of the nation,” said Creighton University economist Ernie Goss, who oversees the survey. “Based on our manufacturing survey over the past several months, I expect overall growth to slow and potentially move into negative territory in the months ahead.”
The survey results are compiled into indexes ranging from zero to 100. Any score above 50 suggests growth. A score below that suggests decline.
The survey covers Nebraska, Iowa, Arkansas, Kansas, Minnesota, Missouri, North Dakota, Oklahoma and South Dakota.
The August employment index for the Midwest and Plains plummeted to 45.1, its lowest level in 34 months, from 56.3 in July.
“For the last 12 months, Mid-America employment growth has been 0.7%, compared to a much higher 1.5% for the U.S.,” Goss said. “This month, as in July, approximately 40% of supply managers (who responded) reported that the shortage of qualified workers was the greatest economic challenge for their company for the next 12 months.”
The regional trade numbers were down again with both export orders and imports falling in the August survey. The index for new export orders sank to 39.6 from July’s 44.7, and the import index dropped to 42.3 from 43.8 in July.
Two-thirds of the supply managers who responded in August indicated that the trade war and tariffs were harming their companies.
The business confidence index plunged to 45.0 last month from 51.4 in July — a 35-month low.
“I expect business confidence to depend heavily on trade talks with China, the Federal Reserve’s interest rate actions in the weeks and months ahead, and recession signals from the nation’s financial markets,” Goss said.
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Nebraska’s overall index fell into negative territory after two straight months with readings above growth-neutral. The index tumbled to 49.3 last month from July’s 52.9. Index components: new orders at 49.6, production or sales at 51.6, delivery lead time at 59.7, inventories at 42.3 and employment at 43.4.
Nebraska job growth over the past 12 months was flat for durable-goods producers, Goss said, while nondurable-goods manufacturers experienced solid growth. However, the survey showed the state’s manufacturing sector lost jobs in August, he said.
Iowa’s overall index sank below the 50.0 threshold to hit 49.7 last month, compared with 52.6 in July. Index components were new orders at 51.8, production or sales at 49.4, delivery lead time at 59.4, employment at 45.7 and inventories at 42.1. Manufacturers experienced slightly positive growth over the past 12 months.
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