Survey: Midwest Economy Has Hit Bottom

A survey of supply managers and other business executives in nine Midwest and Plains states suggests that the regional economy has bottomed out, according to Manufacturing.Net.

The Mid-America Business Conditions index rose to 46.6 in May, compared with 42.7 in April and 39.7 in March. It was the index’s fifth straight monthly increase. The survey’s index ranges between 0 and 100, and any score below 50 on the index suggests a contracting economy over the next three to six months.

Creighton University economics professor Ernie Goss said that the past few months’ readings indicate the Midwest and Plains economy has hit bottom. “However, little in the May survey points to an economic turnaround in the next three to six months,” said Goss. “I continue to expect the Mid-America economy to be out of a recession by the end of the fourth quarter of this year.”

The survey states are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Looking ahead six months, economic optimism in May hit its highest level since February 2005. The index rose to 65.9 from 61.4 in April, far above last November’s record low of 22.4. The May index on employment declined to 40.5 in May from 41.4 in April. Goss said he does not expect job gains of any significance until well into 2010.

The survey’s prices-paid index, which tracks the cost of raw materials and supplies, rose to 39.3 in May from 34.2 in April. New-export orders rose to 44.9 in May from 42.4 in April. The import index rose to 48.2, compared with 44 in April.

The survey also showed: New orders at 55.1, up from 43.0 in April; Production at 51.0, up from 42.8; and delivery lead time at 46.8, down from 50.0.

Goss and the Creighton Economic Forecasting Group have conducted the monthly survey since 1994.