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Published May 01, 2009, 06:40 AM

Economist: Midwest, Plains economy shows encouraging signs

Even in recession, N.D.'s economy stronger than region's, nation's, survey finds
A survey of business leaders in nine Midwestern and Plains states suggests that despite some encouraging signs, the region is well short of economic recovery.

By: Associated Press,

OMAHA, Neb. — A survey of business leaders in nine Midwestern and Plains states suggests that despite some encouraging signs, the region is well short of economic recovery.

Economic indicators have pushed the overall index for the April Mid-America Business Conditions survey to its highest level since September.

But economics professor Ernie Goss, who oversees the survey, says, "Our survey is not indicating an economic revival any time soon."

In a news release, Goss predicted the region's economy will emerge from recession by the fourth quarter, unless the growing threat posed by swine flu produces considerable economic problems.

The survey states are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

The Institute for Supply Management, formerly the Purchasing Management Association, began formally surveying its membership in 1931 to gauge business conditions.

The Creighton Economic Forecasting Group uses the same methodology as the national survey to consult supply managers and business leaders. Creighton University economics professor Ernie Goss oversees the report.

The overall index ranges between 0 and 100. A figure greater than 50 indicates an expanding economy over the next three to six months.

Here are the state-by-state results of the April survey in the Mid-America region:

_Arkansas: For the second straight month, Arkansas' overall index rose. It hit a still weak 33.0, from March's regional low of 29.6. Components of the overall index for April were new orders at 23.3, production at 31.7, delivery lead time at 36.7, inventories at 40.0 and employment at 33.3. "The pace of job losses in the state's durable-goods manufacturing sector have accelerated recently," said Goss. He expects Arkansas' seasonally adjusted unemployment rate to run fourth-tenths of a point higher before it stabilizes.

Iowa: Iowa's overall index inched higher, to 42.7 from March's 42.6 and well above January's record low of 22.3. Components of the overall index were new orders at 40.4, production at 38.8, delivery lead time at 47.6, employment at 47.9 and inventories at 38.8. "Both durable and nondurable manufacturers in Iowa continue to report weakening economic conditions. I expect the state's seasonally adjusted unemployment rate to rise by another one-half percentage point before it stabilizes," Goss said.

_Kansas: The state's overall index slumped for the sixth time in the past seven months, to a very weak 30.9 from 35.9 in March. Components of the index were new orders at 27.1, production at 22.9, delivery lead time at 35.4, employment at 29.2 and inventories at 37.5. "Durable- and nondurable-goods manufacturers continue to report weak economic conditions," Goss said. "Even aircraft manufacturers in Kansas are experiencing pullbacks due to the global economic recession." He said he expected the state's unemployment rate to increase four-tenths of a point before the end of the second quarter.

_Minnesota: Minnesota's overall index climbed to 42.6 from March's 31.0 and February's 28.4. Components of the index were new orders at 47.9, production at 45.3, delivery lead time at 45.9, inventories at 33.3 and employment at 40.5."Durable-goods producers, especially those dependent on international sales, continue to struggle economically," Goss said. "I expect Minnesota's seasonally adjusted unemployment rate to match the (nation's) before the end of the second quarter." That likely means an increase of six-tenths of a point in the state's unemployment rate, he said.

_Missouri: For the seventh straight month, Missouri's overall index rose, hitting 46.9, compared with March's 39.6 and February's record low of 30.3. Components of the index were new orders at 50.6, production at 50.9, delivery lead time at 53.6, inventories at 40.6 and employment at 39.2. "Due to Missouri's dependence on durable-goods manufacturing, especially related to the auto industry, Missouri is the only state with an unemployment rate above the national reading," Goss said. A half-point increase in unemployment is likely by the end of the second quarter, he said.

_Nebraska: For the eighth consecutive month, Nebraska's overall index rose. It hit 39.8 in April, compared with 36.7 in March and 35.9 in February. Components of the index were new orders at 36.0, production at 39.4, delivery lead time at 47.8, inventories at 40.3 and employment at 35.8. "Given recent weakness in Nebraska's nondurable-goods manufacturing sector, the state's pace of job losses has accelerated over the past few months. Even though Nebraska's unemployment rate is roughly half that of the U.S., I expect the gap to close a bit over the next few months as Nebraska's unemployment rises faster than that of the U.S.," Goss said.

_North Dakota: For the fourth straight month, North Dakota's overall index dipped below growth neutral. The April reading slumped to 35.8 from March's 40.5. Components of the index were new orders at 29.2, production at 35.4, delivery lead time at 37.5, employment at 50.0 and inventories at 27.1. "It is difficult to separate the economic weakness resulting from the recession from that produced by the recent flooding. Even though the state's economy has entered a recession, it is clear that North Dakota's economy is significantly stronger than that of the nation and the region," Goss said.

_Oklahoma: For the fourth straight month, Oklahoma's overall index sank, to 31.3 from March's 37.2 and February's 46.9. Components of the index were new orders at 31.3, production at 12.5, delivery lead time at 56.3, inventories at 43.8 and employment at 12.6. "We are finally detecting economic fallout from weaker energy commodity prices in the state. Based on our survey, this weakness should continue in the months ahead," Goss said.

_South Dakota: For the sixth time since September, South Dakota's overall index sank, to 35.0 from March's 42.1 and February's 45.7. Components of the index were new orders at 46.4, production at 35.7, delivery lead time at 42.9, inventories at 14.3 and employment at 35.6. "Even though South Dakota's economic downturn has been less severe than in the rest of the nation, South Dakota's pace of job losses has accelerated over the past few months, according to our survey. I expect the state's seasonally adjusted unemployment rate to climb to 5.5 percent by the end of the second quarter," Goss said.

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On the Net:

Creighton Economic Forecasting Group: http://www.outlook-economic.com

On the Net:

Creighton Economic Forecasting Group: http://www.outlook-economic.com

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