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Mid-America's Economy Growing
Monday, July 7, 2014 6:20 AM

The Mid-America Business Conditions Index for June, a leading economic indicator for a nine-state region stretching from North Dakota to Arkansas, points to healthy and improving growth in the next three to six months.

The Business Conditions Index, which ranges between 0 and 100, climbed to 60.6 from 60.5 in May. This is reportedly the highest overall reading recorded since March 2011.

Businesses have expanded employment at a brisk pace for the past three months. The employment index for June rose to 61.4, its highest level in two years, and up from last month’s 60.0. Growth among durable goods manufacturers in the region is pushing overall employment growth higher. Except for Arkansas and Missouri, all states in the region have regained all jobs lost during the recession. This pace will remain strong for the second half of 2014.

This month businesses in the region were asked how much they expect the price of health insurance to increase for 2015 over 2014 price levels. On average, businesses anticipate an increase of 7.4 percent in the cost of health insurance. The cost increase will be passed on to consumers in the form of higher prices for finished goods.

The new export orders index soared to 60.2 from 53.0 in May. The import index for June sank to 53.4 from May’s 62.6. It is a very encouraging signal that exports have been an important source of growth for the region.

In Arkansas, the June overall index, or leading economic indicator, for Arkansas declined to 51.3 from May’s much stronger 58.9. Components of the index from the monthly survey of supply managers were new orders at 48.9, production or sales at 48.7, delivery lead time at 57.3, inventories at 45.2, and employment at 56.4.

“Even with recent growth, Arkansas and Missouri are the only two states that have yet to regain the jobs lost during the national recession.  According to our surveys, Arkansas will continue to add jobs but at a slow pace with durable goods manufacturing outperforming nondurable goods production in the state,” said said Ernie Goss, Ph.D., director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.

Oklahoma’s leading economic indicator continues to point to expanding economic conditions in the months ahead. Oklahoma’s Business Conditions Index for June jumped to 66.6 from May’s healthy 58.3. Components of the June survey of supply managers in the state were new orders at 71.2, production or sales at 69.9, delivery lead time at 62.8, inventories at 63.3, and employment at 65.9.

“There are more workers on Oklahoma companies’ payrolls than ever before.  Our surveys indicate that this expansion will continue to with a new employment record set each month.  Growth for both durable and nondurable goods, especially those tied to energy, will boost economic expansion for the second half of 2014,” added Goss.

The Creighton Economic Forecasting Group has conducted the monthly survey of supply managers in nine states since 1994 to produce leading economic indicators of the Mid-America economy. States included in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

 

(Source: Creighton University Heider College of Business)