Across the Midwest, the economic outlook remains at a healthy level, but a new report issued Thursday shows a slip in confidence.
The Mid-America Business Conditions index dropped to 62.5 in June from 64.2 in May. It marks the first decline in the last seven months, but Creighton University economist Ernie Goss said that the forecast remains positive because any score over 50 continues to suggest economic growth in the coming months.
“While there remains weakness in the consumer sector, our survey of manufacturers and value-added service companies over the past several months signals very positive growth for the regional economy into the fourth quarter of this year,” said Goss, who also serves as the director of the Creighton Economic Forecasting Group.
The report also shows that the regional employment index remained above what is considered growth neutral, but it did drop from 60.1 in May to 58.3 in June.
Goss said that 30.4 percent of businesses reported an increase in employment levels while just 13.9 percent indicated that employment levels had declined.
“Despite improved hiring, the region’s employed work force is down by 452,000 since the beginning of the recession, a 3.5 percent job loss. This compares to a loss of 5.4 percent of all U.S. jobs,” Goss said. “Even though the region will continue to add jobs, I expect unemployment rates for most states in the region to remain at elevated levels as firms remain overly cautious about hiring new workers.”
For the 13th straight month, the prices-paid index — the index that tracks the cost of raw materials and supplies — remained above the growth neutral threshold at 68.8. That is a decline from 80 in May.
“This is the largest one-month drop in our inflation gauge since October 2008,” Goss said.
“However, surveys over the past several months indicate that it is too early to ignore the potential for elevated inflation pressures.”
The report also indicated that other sectors were down including new orders at 67.0, down from May’s 72.4; production or sales at 70.6, down from 72.2; and delivery lead time at 61.4, down from 62.1.
On the Web:
Creighton Economic Forecasting Group:
http://www.outlook-economic.com
Matthew Clark can be reached at matthew.clark@morningsun.net or at 620-231-2600, Ext. 140
