FOR MORE INFORMATION CONTACT:
Dr. Ernie Goss (402) 280-4757 ([email protected])
Cindy Workman (402) 280-2969 ([email protected])
UAW STRIKE, ASIAN CRISES AND SLOWDOWN IN AGRICULTURE RELATED INDUSTRIES, PRODUCE LOWEST INDEX IN TWO YEARS
FOR IMMEDIATE RELEASE, AUG. 3, 1998
OMAHA, Neb. - The UAW strike may be over but its impact is evident in the economies of several of the states included in the nine-state Mid-American Business Conditions Index. The effect of the strike, combined with the slowdowns in industries tied to agriculture and softness in the oil industry, produced the lowest overall index since January 1996, Creighton University Professor of Economics Dr. Ernie Goss said today.
The Mid-American Business Conditions Index, a leading economic indicator for the nine-state Mid-American region, was 51.5 for July, down from 54.9 in June, said Goss, who holds the Jack A. MacAllister Chair in Regional Economics at Creighton.
"While the overall index has dropped it is still above 50 and indicates that the economy will continue to grow, however the rate of growth continues to slow. At the same time purchasing managers report that metropolitan areas are faring better than rural areas in all nine states.
"Problems in the farm economy are now taking their toll on other industries in the region while energy related industries continue to experience softness," said Goss.
"The price index for July at 51.7 is the lowest recorded since initiation of the survey in September 1994.
"We are seeing virtually no inflation in the manufacturing sector and very little inflation in the non-manufacturing sector of the regional economy," Goss reported.
Export orders for July were at 49.3, down from 52.8 in June. Confidence levels are at their lowest since June of 1996 with an index in July of 52.0.
The new jobs index was at 54.9 in July, down from 59.9 for June. For the nine-state Mid-American region, the July production index was 49.2, down from 55.1 in June. The new orders index was 49.1, down from June's 53.6. The July inventory index was at 52.8, up slightly from 52.2 in June.
Individual state overall indices for July ranged from a low of 40.2 in Minnesota to a high of 54.9 in Nebraska.
Goss conducts a monthly survey of purchasers in nine states to produce the leading economic indicator of the Mid-American economy. States included in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The survey is supported by a grant from the Norwest Nebraska Foundation and by purchasing management associations in those states.
The National Association of Purchasing Management began to formally survey its membership to gauge business conditions in 1931. Goss uses the same methodology as the national survey.
The overall index ranges between 0 and 100. An index number greater than 50 indicates an expansionary economy, and an index under 42 forecasts a contractionary economy. Goss releases the Mid-American Survey of Business Conditions on a monthly basis in conjunction with the national PMI.
Here are individual purchasing management index figures for each state included in the survey and a brief analysis of the index:
--ARKANSAS: The overall index for July was 49.3, down from 57.1 in June."Purchasing managers reported export orders in July were at 50.0, up from 40.0 in June, one the largest increases in the nine state area. However, purchasing managers in the state were very pessimistic regarding future economic condition with the lowest confidence index in the region at 33.3 for July," said Goss.
--IOWA: The overall Iowa index for July was 52.0, down from 55.1 in June. "Iowa purchasing managers in industries closely related to agriculture reported significant slowdowns due to low farm prices and export problems.Employment was down slightly at 63.6 from June's 63.8. The price index was down as well at 46.7, compared to June's 52.1 which shows little or no inflationary pressure," said Goss.
--KANSAS: The overall Kansas index for July was 54.2, up from 53.9 in June. "Despite the problems caused by the UAW strike, Kansas seems to be holding its own. Production was up for the month of July with an index of 54.2, up from 50.0 in June. Employment increased slightly from 57.1 in June to 58.3. In July. export orders were also up with an index of 52.1, compared to 47.4 in June. Prices were down with an index of 47.9 for July," said Goss.
--MINNESOTA: Minnesota reported the lowest overall index for July for the region at 40.2, down from 52.0 in June."Employment dropped for July to a low of 37.9, after last month's increase at 55.5. Problems in the agriculture sector, including low prices and export softness are spilling over into Minnesota's economy. Furthermore, a shortage of workers to fill open positions is restraining growth in the state," said Goss.
--MISSOURI: The overall July index for the state is at 54.3, up slightly from June's 53.9. "The impact from the auto workers strike was evident in the numbers for employment. The new jobs index for July was 50.0, down from 55.0 in June. Export orders dropped from 53.4 in June to 42.9 in July. The July survey was completed before the settlement of the strike," said Goss.
--NEBRASKA: "The metropolitan areas of Nebraska are doing well,"said Goss. However, the rural areas are not as strong. Low prices for farm goods and problems for farm suppliers helped to bring exports down to 49.3, from 51.1 in June. Nebraska purchasers reported an overall index of 54.9, down from 58.3 in June.
--NORTH DAKOTA: The overall index for July was 49.3, down from 53.7 in June. "While export orders were up significantly at 56.7 compared to 39.3 in June, the production index went down to 43.8, from 56.7 in June. Employment was down as well at 56.3, compared to 66.7 last month. Problems in the farm economy continue to slow agriculture related industries in the state. Weakness in prices for most farm goods is beginning to negatively affect the state economy," said Goss.
--OKLAHOMA: The UAW strike and problems in energy related industries took a toll on Oklahoma in July. Purchasing managers reported an overall index of 41.7, compared to 45.3 in June. "We'll have to wait and see if this downward trend continues for the state of Oklahoma. New orders were up in July at 44.4. Though production was down at 33.3 compared to 55.0 in June, that may have been the result of the UAW strike. The July survey was completed before the strike was settled," said Goss.
--SOUTH DAKOTA: The South Dakota index for July was 52.1, down from 57.5 in June. "Production with an index of 50.0 was down again in South Dakota. While new orders are down as well, June's index of 56.7, is still well within the growth range. Problems in the farm sector are spilling over into the rest of the state economy," said Goss.
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