Survey suggests Midwest slowdown of economic growth
OMAHA, Neb. (AP) — Tariffs and flooding have slowed economic growth in nine Midwest and Plains states, according to a Monday report on a survey of business supply managers.
The Mid-America Business Conditions Index dropped to 54.3 in May from 55.9 in April. The figure was 58.2 in March. It was the second straight decline in the overall index, but the 30th straight month the index has remained above growth neutral 50.0.
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 regional economy continues to expand at a positive pace,” said professor Ernie Goss, director of Creighton University’s Economic Forecasting Group, who oversees the survey. “However, tariffs and flooding across several states pulled the overall index below growth neutral for four states: Iowa, Nebraska, North Dakota and Oklahoma,” he said.
“I expect the latest announced tariffs against Mexico, if implemented, to push more Mid-America states into job loss territory in the months ahead.”
Flooding and trade issues have pushed regional manufacturing employment back to December 2018 levels, Goss said. Almost a quarter of the supply managers who responded reported ordering early to avoid expanding tariffs, he said.
“A significant boost in inventories for the first quarter was the prime factor pushing the U.S. GDP growth to 3.1 percent. I expect sinking inventories to weigh on both regional and U.S. growth for the second quarter 2019,” he said.
Looking ahead six months, the May business confidence index slumped to 54.5 from April’s 62.2.
“I expect business confidence to depend heavily on trade talks with China and Mexico in the weeks” ahead, Goss said.
The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.