Survey suggests economy will remain weak in Midwest, Plains
A monthly survey of business leaders suggests the economy will continue slowing in nine Midwest and Plains states because of weakness in agriculture and energy businesses.
The overall economic index for the region declined to 45.5 in September from August's 47.8. The survey results are compiled into a collection of indexes ranging from zero to 100. Any score below 50 suggests the economy is weakening.
Creighton University economist Ernie Goss said trade figures for the region fell dramatically in September after the Hanjin Shipping bankruptcy caused disruptions.
"Supply managers reported the Hanjin Shipping bankruptcy reduced both exports and imports for the month," Goss said. "Global economic weakness added to September trade difficulties."
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The export index fell to 33.8 last month from August's 50.1. And the import index fell to 43.4 in September from August's 45.8.
A number of Hanjin ships were temporarily stranded at sea after the company's bankruptcy because it couldn't guarantee it would be able to pay dock fees and fuel bills for unloading. Goss said that also made it harder for businesses to replenish their inventories. So the inventory index fell to 40.1 in September from August's 52.3.
Goss said energy and agriculture manufacturing is especially weak in the region.
"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 survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
Over the past year, manufacturing companies in the region have cut almost 20,000 jobs while companies in other sectors added almost 109,000 jobs. Goss said those jobs numbers illustrate the weakness in manufacturing.
The region's employment index remained in negative territory at 46.8 in September, even though it was slightly higher than August's 44.
The confidence index, which measures how optimistic business leaders are, also remained in negative territory at 48.5 in September. That was only slightly better than August's 45.4.
The survey also suggested modest inflation pressure will continue in the months ahead. The prices-paid index increased to 59.7 in September from 56.5 in August.
Business leaders are expecting prices of raw materials and supplies to increase by about 2 percent over the next six months.