Economic growth is expected to slow over the next three to six months in nine Midwestern and Plains states, according to a report released Thursday from a July survey of business supply managers.
The Mid-America Business Conditions index dropped to 52.0 in July, from 55.4 in June, the report said. It’s the lowest figure in more than three years.
“The regional economy expanded at a slower pace than the rest of the nation for the first half of 2019,” said Creighton University economist Ernie Goss, who oversees the survey.
“Weak farm income, produced partially by tariffs and flooding, pulled regional growth below that of the nation. Even so, based on our manufacturing survey over the past several months, I expect overall growth to remain on a positive but slower path,” he said.
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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 survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The regional trade numbers were down again. The index for new export orders sank to 44.7, from June’s 48.3, and the import index slumped to 43.8 in July, from 50.0 in June.
More than half the supply managers who responded indicated that tariffs were making it more difficult to buy internationally. The figure was unchanged, however, from when the same question was asked in January.
Economic optimism, as captured by the business confidence index, plunged to 51.4 in July, from June’s 59.1. The July figure was the lowest confidence reading since October 2016.
“I expect business confidence to depend heavily on trade talks with China and the Federal Reserve’s interest rate actions in the weeks and months ahead,” Goss said.
Here are the results for July for Nebraska and Iowa:
After falling below growth neutral in May, Nebraska’s overall index remained above the growth neutral threshold of 50.0 for a second straight month. However, it dropped to 52.9 in July from 55.9 in June. Index components were new orders at 53.4, production or sales at 52.0, delivery lead time at 54.3, inventories at 47.9 and employment at 56.8. “Recent surveys indicate that durable-goods producers, including machinery manufacturers, experienced declines in economic activity. On the other hand, nondurable-goods producers, including food manufactures, are experiencing solid gains in economic activity,” Goss said. Federal data shows that workers have experienced a 3.1% increase in hourly wages over the past 12 months, slightly below the national gain of 3.2%, he said.
The state’s overall index rose to 52.6, compared with 50.4 in June. Index components for July were new orders at 52.6, production or sales at 52.2, delivery lead time at 54.1, employment at 56.6 and inventories at 47.2. Recent surveys indicate that manufacturers were experiencing gains in economic activity. Federal data show Iowa workers have experienced a 3.1% increase in hourly wages over the past 12 months, slightly below the national gain of 3.1% over the same period, Goss said.