Survey Suggests Midwest Economic Growth Slowing
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OMAHA, Neb. (AP) – Growing energy prices combined with weather-related supply problems has slowed economic growth in nine Midwestern and Plains states, according to a new monthly survey released Friday.
Creighton University economist Ernie Goss said the earthquake and tsunami that struck Japan in March, followed by flooding throughout the region hasn’t helped business.
“Higher energy prices, and supply disruptions related to the Japanese tsunami and to floods in the Mid-America region are clearly slowing growth in the economy and cooling rapid commodity price growth,” Goss said.
As a result, the overall index for the Mid-America region dropped in June, to 54.9 from 60.2 in May. The June index is still above 50, so the region’s economy should continue growing in the next three to six months, but the growth has slowed since earlier this year.
The survey of supply managers and executives and the report use a collection of indexes ranging from zero to 100. Any score above 50 suggests growth in an index while a score below 50 suggests that index will decline.
States in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The business managers who responded to the survey are less optimistic about the economy. The confidence index dropped to 52.3 in June from May’s 60.4 and April’s 57.5.
“Energy prices combined with uncertainty surrounding the national economy and U.S. debt situation served to puncture business confidence for the month,” Goss said.
The June job index also declined but remained in positive territory at 53.6 in June, down from May’s 58.1. Goss said it appears that companies will continue hiring in the region, but at a slower pace.
The survey’s inflation gauge, which tracks the cost of raw materials and supplies, continues to indicate significant cost increases even though it declined. The prices-paid index decreased to 74.3 in June from May’s 84.9 and April’s record high 94.
The inventory index fell to 51 in June from May’s 58.9, and supply managers in the survey said flooding in the region was creating delivery problems. The Missouri River and many smaller rivers are overflowing because of heavy spring rains and above-average snowpack in the mountains. The flooding is disrupting key highways and rail lines.
The region’s exports declined a bit in June as the dollar strengthened. The export index declined to 54.9 in June from May’s 60.1.
The other components of the June index were:
– New orders at 55.9, down from May’s 59.6.
– Production or sales at 53.8 in June, down from 60.9.
– And delivery lead time at 60.1, down from May’s 63.6.
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