Midwest business conditions improve in August, but still weak
Weakness in agriculture, energy sectors weighs on regional economy
George C. Ford
Weakness among manufacturers linked to agriculture and energy continue to weigh on regional economic conditions, according to a monthly survey of supply managers in nine Midwestern states.
The Creighton University Mid-America Business Conditions Index rose slightly to 47.8 in August from July’s 47.6, but remains below growth neutral 50.0.
Over the past several months the regional index, much as with the national reading, has indicated the manufacturing sector is experiencing anemic to negative business conditions.
“Weakness among manufacturers linked to agriculture and energy continue to weigh on regional economic conditions,” said Ernie Goss, director of Creighton University’s Economic Forecasting Group. “Due to the heavy dependence of the region on these two sectors, I will expect to see the regional economy to continue to underperform the national economy.”
Goss said the regional employment gauge indicates the manufacturing sector continues to lose jobs. The index sank to 44.0 from July’s 46.9.
“Over the past 12 months, U.S. Bureau of Labor Statistics data indicate the region’s manufacturing sector has lost more than 22,000 jobs for a loss of 1.6 percent,” Goss said. “During the same time period, the region has gained a total of 102,000 jobs for all sectors for an increase of 0.8 percent.”
Looking ahead six months, economic optimism, as measured by the August business confidence index, sank to 45.4 from July’s 47.
“Global economic uncertainty and weakness in the region’s agricultural and energy sector are weighing on the business economic outlook of supply managers,” Goss said.
Iowa’s August Business Conditions Index expanded to a weak 48.3 from July’s 47.9.
“Metal manufacturers and agricultural machinery producers continue to experience pullbacks in economic activity. On the other hand, food processors in the state are boosting production and employment,” Goss said.