Survey: Midwest economy confident

Survey: Midwest economy confident

	Published : Thu, 01 Feb 2007 22:01 By : Agencies Print this Story

OMAHA, Neb. (AFX) - Economic growth and confidence galloped ahead last month in the Mid-America region, according to the January Business Conditions Survey of supply managers and business leaders in the nine-state region.

The overall Business Conditions Index rose to its highest level in six months, to 57.6 from December's 53.0, as inflationary pressures ebbed -- also for the sixth straight month. The prices-paid index, which tracks the cost of raw materials and supplies, hit its lowest level since July 2005: 67.8, compared with 68.3 in December and 69.4 in November.

'January survey results were very good for the nine-state region, with economic activity and optimism related to renewable energy contributing to the January expansion,' Creighton University economics professor Ernie Goss said Thursday with the release of the survey results.

For six months out, the survey responders' economic optimism soared to 61.4 from December's weak 47.3.

Lower oil prices and the Federal Reserve's halt to interest rate increases have raised the economic outlook among supply managers, said Goss, who overseas the survey as director of the Creighton's Economic Forecasting Group and holds the Jack A. MacAllister Chair in Regional Economics.

'Given our numbers and the latest government data, I expect the Federal Reserve to make no interest rate changes in the near future as the downturn in housing and oil prices below $60 per barrel restrain inflationary pressures.

'However,' he said, 'a large rebound in oil prices would likely push the Fed to raise rates.'

The index ranges between 0 and 100. An index of 50 or greater indicates an expanding economy over the next three to six months. An index less than 50 indicates a negative outlook.

The Mid-America survey includes Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Those surveyed reported gains in January, raising the employment index for a second consecutive month, to 54.6 from December's 53.1 and November's 50.5.

'After weak but positive job growth in the fourth quarter, I expect new hiring to expand at a fairly modest pace in the region for the near term,' Goss said. Robust job growth was expected for nonurban areas with ties to the agriculture economy or biofuels production.

'Nondurable-goods manufacturing and value-added service also recorded healthy business activity for January with positive but somewhat tepid job growth,' Goss said.

January's index for new export orders climbed to 56.1 from 51.3 in December, while imports dropped 55.0 from 57.9 in December.

Other components of January's overall index: new orders at 61.4, up from December's 54.0; production at 60.3, up from 52.7; inventories at 52.5, down from 55.9; and delivery lead time at 52.6, up from 49.5.

The Creighton Economic Forecasting Group has conducted the monthly survey since 1994.