Survey finds Midwest, Plains economy near recession

OMAHA, Neb. -- The economy in nine Midwestern and Plains states is near recession because of flooding in Iowa and Missouri and weakness in Kansas and Nebraska, according to a new survey of business leaders.

The report released Tuesday says inflation pressure is also likely to remain high.

The overall economic index for the region registered 50.5 in June, which is barely above the growth neutral 50.

Any score above 50 on the index, which ranges between 0 and 100, indicates a growing economy over the next three to six months.

In May, the reading was 49.6.

Creighton University economics professor Ernie Goss said the report shows "a regional economy teetering on recession with excessive inflationary pressures in the economic pipeline."

The inflation index, which tracks the cost of raw materials and supplies, slipped to 91.7, from 92 in May and 93.1 in April.

The report covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

The supply managers and business leaders surveyed are not very confident about their economic prospects in the next six months. The confidence index fell to 35.1 from May's 38.2.

The employment index for the region dropped to 46.2 in June, from 46.8 in May. It's the lowest level since September 2002.

The new-export orders index rose to 59.2, from May's strong 58 and April's healthy 56.6. That's thanks to the cheap dollar, which makes U.S. goods cheaper in other countries.

The other components of June's overall index were:

• New orders at 46.6, down from May's 47.8;
• Production at 54.4, up from 47.3;
• Inventories at 49, down from 52.7;
• Delivery lead time at 58.7, up from 58.5.

The Creighton Economic Forecasting Group has conducted the monthly survey since 1994.

The Institute for Supply Management, formerly the Purchasing Management Association, began to formally survey its membership in 1931 to gauge business conditions. The Creighton Economic Forecasting Group uses the same methodology as the national survey.