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OMAHA, Neb. — A new monthly survey of business supply managers suggests the economy is growing slowly in nine Midwest and Plains states as the U.S. trade war with China continues, according to a report released Thursday.
The Mid-America Business Conditions index rebounded to 50.6 in December, compared with 48.6 in November, the report said.
Surveys over the past several months indicate that the regional manufacturing economy is being harmed by the trade war and the global economic slowdown, said Creighton University economist Ernie Goss, who oversees the survey.
“This will be a drag on the overall Mid-America economy for the first half of 2020. However, I expect overall regional growth to remain soft but positive for the first half of the year,” Goss said.
The survey results are compiled into a collection of indexes ranging from zero to 100. Survey organizers say any score above 50 suggests growth. A score below that suggests decline. The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The weakness in the region’s manufacturing and agriculture sectors has spilled over into the broader regional economy. Over the past 12 months, the region has added jobs at an annual pace of 0.7% — less than half the 1.5% rate of the nation’s economy.
The regional trade numbers were mixed in December. The index for new export orders rose to a weak 43.5 from November’s 39.1. The imports index was unchanged from November’s 52.0. Supply managers continue to boost purchasing from abroad in anticipation of higher tariffs in the weeks and months ahead. But 43% of supply managers who responded said tariffs had increased the prices of supplies.
Economic optimism for the next six months, as reflected by the December business confidence index, climbed to 57.6 from November’s 52.9. “Potential January passage of the U.S.-Canada-Mexico trade agreement and Phase One of the trade agreement with China boosted the regional business confidence index for the month,” Goss said.
Arkansas’ overall index climbed to 53.0 from November’s 49.7. Index components were new orders at 54.2, production or sales at 51.4, delivery lead time at 55.3, inventories at 57.2 and employment at 46.7.
“Based on recent surveys, I expect the Arkansas economy, for the first half of 2020, to rank third in the region in terms of economic performance with overall annualized inflation-adjusted GDP growth at 2.84%,” said Goss.
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