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Survey Suggests Improving Business Conditions in Midwest

Adams Building in Fulton
KBIA

Business conditions improved last month in nine Midwest and Plains states despite shortages of skilled workers, according to a monthly survey report issued Wednesday.

The Mid-America Business Conditions Index rose to 55.2 in December from 54.1 in November, the report said. The October reading was 54.9. Survey organizers say any score above 50 suggests growth.

"The regional economy continues to expand at a positive pace," said Creighton University economist Ernie Goss, who oversees the survey. "However, as in recent months, shortages of skilled workers remain an impediment to even stronger growth. Furthermore, supply managers are reporting negative impacts from tariffs and trade skirmishes."

The December employment index sank to 50.0 from 57.5 in November. "Overall manufacturing employment growth in the region over the past 12 months has been very healthy at 2.3 percent, compared (with) a lower 2.2 percent for the U.S," Goss said. "I expect this gap to close in the months ahead as regional job growth slows faster than national manufacturing job growth."

The survey results are compiled into a collection of indexes ranging from zero to 100, with a score above 50 suggesting growth. A score below that suggests decline. The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota. Looking ahead six months, the December index for economic optimism fell to a still solid 54.1 from November's 55.5.

"However, I expect business confidence to depend heavily on the Fed's interest rate policies and trade talks with China," Goss said.

More than 43 percent of supply managers who responded to the survey expected profits for their companies to improve in 2019, he said. The regional trade numbers turned sharply lower last month. The index for new export orders slumped to 48.1 from November's 51.8, and the import index plummeted to 41.1 from 54.3 in November.

"Despite higher tariffs on imported goods, healthy regional growth boosted imports for the month," Goss said. 

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