Report: Midwest business conditions index rose again

A business conditions index for nine Midwestern and Plains states surged again last month, which a report released Monday said is a sign of continued improvement in regional economic conditions.

The Mid-America Business Conditions Index hit 62.1 in March, compared with 59.7 in February, the report said. The January figure was 57.3.

Twenty percent of the business supply managers who participated in the survey "reported rapidly expanding healthy economic growth in their area, while only 4 percent reported an economic downturn in their area," said Creighton University economist Ernie Goss, who oversees the survey.

The survey results are compiled into a collection of indexes ranging from zero to 100. Survey organizers say any score above 50 suggests growth in that factor. A score below that suggests decline. The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Minnesota's overall index rose to 61.0 last month from 57.6 in February. Index components were new orders at 65.1, production or sales at 66.7, delivery lead time at 58.2, inventories at 58.1 and employment at 57.0. In 2017 Minnesota ranked 23rd in the nation, and first in the nine-state region, in exports. The exports supported about 144,500 jobs in the state, directly and indirectly, Goss said.

The overall North Dakota index sank below growth neutral last month. It slumped to a regional low of 42.5 in March from 53.3 in February. Index components were new orders at 45.3, production or sales at 49.1, delivery lead time at 38.2, employment at 39.7 and inventories at 40.4. In 2017, North Dakota ranked 38th in the nation, and eighth in the nine-state region, in exports. The state's new export orders index for March of 53.4 "indicates that North Dakota exports remain solid," Goss said.

The index for South Dakota rocketed to a regional high 67.4 in March from 56.6 in February. Index components were new orders at 71.9, production or sales at 72.7, delivery lead time at 65.1, inventories at 64.2 and employment at 62.9. "In 2017 South Dakota ranked 49th in the nation, and ninth in the nine-state region, in terms of the export of goods," Goss said. The exports supported around 9,500 state jobs, directly and indirectly. "The state's new export orders for March of 70.6 indicate that South Dakota exports remain very strong," he said.

Iowa's overall index jumped to 64.7 in March from 59.4 in February. Index components were new orders at 69.0, production or sales at 70.2, delivery lead time at 62.2 employment at 60.4, and inventories at 61.6. In 2017 Iowa ranked 27th in the nation, and third in the nine-state region, in exports. "These exports supported approximately 92,500 jobs, directly and indirectly, in the state," Goss said.

Durable-goods manufacturers were expanding at almost twice the pace of nondurable-goods producers, Goss said. "Over the past 12 months, regional manufacturing employment has expanded by 1.9 percent, compared to U.S. manufacturing growth of 1.8 percent," he said.

The March employment index slipped to 58.4 last month from 59.4 in February, but two-thirds of firms who responded to the survey indicated they would add workers for the remainder of the year.

The regional wholesale inflation index and the U.S. inflation gauge remain elevated, the report said.

"I expect this elevated inflation to begin to show up at the consumer level," Goss said. "As a result, I expect the Federal Reserve's interest rate setting committee to raise short-term interest rates by one-quarter of one percentage point" at its meeting May 2.

Looking ahead six months, the March Business Confidence Index, dipped to a still strong 64.3 from February's 74.5. Goss cited good profit growth, low interest rates and a reduction of global trade tensions for maintaining business confidence.