Midwest economic survey index for February drops slightly

OMAHA, Neb. -- A monthly economic survey index dropped slightly last month but still suggests growth over the next three to six months for nine Midwestern and Plains states, according to a survey report released Monday.

The overall Mid-America Business Conditions Index fell to 57.4 in February from 57.7 in January.

The business confidence portion of the overall index also dropped last month. It hit a still strong 59.7 from January's 62.2.

"As in previous months, modest improvements in regional employment, moderate inflation and less D.C. political turmoil supported supply managers' business outlook for the month," said Creighton University economist Ernie Goss, who oversees the survey.

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

The supply managers were asked how the February weather affected their company's business.

"Almost one-third, or 32.4 percent, indicated that recent extreme weather had a negative impact on company sales," Goss said. Only 5.4 percent reported positive effects, with the remaining 62.2 percent indicating little or no effect.

Despite the rugged winter weather, supply managers, especially those in manufacturing, reported healthy business activity for the first two months of 2014, Goss said.

The inventory index, which tracks the level of raw materials and supplies, rose to 59.7 in February from 53.2 in January.

"This is yet another signal that supply managers are more upbeat about the economy as they increased inventories in anticipation of expanding sales for their companies in the months ahead," said Goss.

The index for new export orders climbed hit 55.4 last month, compared with 54.9 in January. The import index was unchanged from 52.4 in January.

"It is a very encouraging signal to track a fourth straight month of healthy new export orders," Goss said. "At the same time, firms in the region continued purchasing from abroad in expectations of upturns in company sales in the weeks and months ahead."

Here are the state-by-state results for February:

Missouri

The February overall index rose slightly, to 53.6 from 53.2 in January. Components of the index were new orders at 51.5, production or sales at 55.5, delivery lead time at 56.2, inventories at 51.7 and employment at 52.9. Durable-goods producers, including metal manufacturers and motor vehicle manufacturers, boosted recent growth in the state. Business services firms are also experiencing upturns in business activity, Goss said.

Arkansas

The February overall index for Arkansas rose to 55.1 from 53.6 in January. Components of the index were new orders at 67.1, production or sales at 48.6, delivery lead time at 50.1, inventories at 57.0 and employment at 51.8. "Growth among business services firms more than offset pullbacks for nondurable-goods manufacturers," said Goss.

Iowa

Iowa's overall index rose to a regional high of 64.5 from January's 59.1. Components of the index were new orders at 66.5, production or sales at 69.3, delivery lead time at 64.7, employment at 60.2 and inventories at 61.9. Strong growth was recorded for metal manufacturers and food processors. "Even as domestic sales of agriculture equipment have cooled, international sales of farm and earthmoving equipment have boosted business activity of agriculture equipment manufacturers in the state," Goss said. "On the other hand, firms linked to vehicle manufacturing recorded pullbacks in business activity," he said.

Kansas

The state's overall index dropped to 55.1 in February from 58.3 in January. Components were new orders at 49.1, production or sales at 67.3, delivery lead time at 49.8, employment at 52.0 and inventories at 60.6. Growth was recorded for machinery manufacturers and business services firms in the state. But businesses tied to aircraft manufacturing "reported pullbacks in business activity," Goss said.

Minnesota

The overall index advanced to 64.1 from 57.7 in January. Components of the index from the February survey were new orders at 63.3, production or sales at 68.3, delivery lead time at 62.4, inventories at 72.5 and employment at 54.0. "Expansions for durable-goods manufacturers, including medical equipment producers, more than offset pullbacks for food processors," Goss said.

Nebraska

After remaining below growth neutral for the last three straight months of 2013, Nebraska's overall index has risen above 50 for the first two months of 2014. The index hit 53.9 in February, compared with 52.2 in January. Components of the index were new orders at 55.6, production or sales at 57.8, delivery lead time at 47.1, inventories at 51.3 and employment at 57.7. "Durable-goods manufacturers, including metal manufacturers, detailed positive growth," Goss said. Even as domestic sales of agriculture equipment have cooled, international sales of farm and earthmoving equipment have boosted business activity of agriculture equipment manufacturers in the state, and food processors are experiencing healthy growth, he said.

North Dakota

North Dakota's overall index rose to 57.6 from January's 56.5. Components for February were new orders at 56.8, production or sales at 51.6, delivery lead time at 67.8, employment at 59.0 and inventories at 52.9. "Advancing economic conditions among durable-goods producers and business services firms more than offset somewhat weaker business conditions for food processors in the state," Goss said.

Oklahoma

The state's overall index climbed to 58.9 from 54.7 for January. Components were new orders at 75.1, production or sales at 60.9, delivery lead time at 49.2, inventories at 55.8 and employment at 53.4. "Advancing economic conditions among durable-goods producers, including machinery manufacturers, and business services firms more than offset somewhat weaker business conditions for food processors in the state," Goss said.

South Dakota

After moving below growth neutral in November 2012, South Dakota's overall index has been above growth neutral each month since. The overall index in February rose to 60.9 from January's 55.1. Components of the overall index were new orders at 59.4, production or sales at 67.3, delivery lead time at 50.6, inventories at 61.9 and employment at 65.1. "Manufacturers in the state continue to add jobs and increase the hours worked for current employees. Wholesalers in the state are experiencing upturns in business activity," Goss said.

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Online:

Creighton University economic reports: http://business.creighton.edu/economicoutlook