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Dr. Ernie Goss (402) 280-4757 [email protected] Cindy Workman (402) 280-2969
EFFECTS OF UAW STRIKE BEGINNING TO SHOW; ASIA WOES CONTINUE
FOR IMMEDIATE RELEASE, JULY 1, 1998
OMAHA, Neb. -- The United Auto Workers strike against GM is beginning to affect some states and continued economic problems in Asia have slowed growth in others in the Mid-American region, 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 54.9, down from 55.1 in May, said Goss, who holds the Jack A. MacAllister Chair in Regional Economics at Creighton.
"The impact from the UAW strike combined with the effect of the Asian market crisis that is still with us, means a slower rate of growth for the coming months. For states not affected by the strike, wet weather has set back construction and farming, which is starting to spill over into the rest of the economy," Goss said.
"Despite all the setbacks of the past few months, the high value of the dollar, the Asian market crisis, relatively high real interest rates, bad weather,and labor shortages, the economy continues to grow. While growth is slowing, it hasn't slowed as much as we thought it would over the past few months," said Goss.
"The auto workers strike is starting to have an impact, especially in Kansas, Missouri and Oklahoma, where some plants are on strike. We expect to see a larger impact from the strike in the coming months," said Goss.
"But right now, nothing seems to be taking the wind out of the sails of the economy, it's slowing but it's still going forward."
Employment levels still look good throughout the region with the new jobs index at 59.9 for June, up slightly from May's 59.6.
For the nine-state Mid-American region, the June production index was 55.1, down from 58.3 in May. The new orders index was 53.6, up from 52.4 in May. The price index was 54.3, up slightly from May's 52.4. The June inventory index was at 52.2, up from 50.0 in May.
Individual state overall indices for June ranged from a low of 45.3 in Oklahoma to a high of 58.3 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 June was 57.1, down from 60.6 in May. "The index for Arkansas continues to show steady growth. Those surveyed did report an increase in the new jobs index, from 50.0 in May to 63.2 in June. Also, the price index was 50.0, down from May's 62.5, which shows little inflationary pressure," said Goss.
--IOWA: The overall Iowa index for June was 55.1, up from 52.9 in May. "Iowa purchasing managers reported an increase in new orders with an index of 53.1, up from 47.3 in May, which is good news. Employment was up slightly at 63.6 from May's 62.3. However, because of the number of auto-related manufacturing plants in Iowa, we will probably see an impact from the auto workers strike in the coming months. It will depend on how long the strike lasts," said Goss.
--KANSAS: The overall Kansas index for June was 53.9, down from 55.4 in May. "The UAW strike has closed a few plants in Kansas and that is having an impact on the state's economy. Production was down significantly with an index of 50.0, down from May's 61.1. New orders were up slightly at 54.8, compared to May's 52.8. A drop in the employment index to 57.1, from 63.9 in May not only reflects the beginning of the impact from the strike, but also increased difficulties in finding and hiring qualified workers in the state," said Goss.
--MINNESOTA: Minnesota purchasers reported an increase in the overall index at 52.0, up from May's low of 47.9. "Employment and new orders appear to have rebounded in Minnesota with the employment index at 55.5, up from 45.0 in May and the new orders index is at 50.0, up from May's low of 35.5. Softness in some farm sectors is continuing to spill over into the Minnesota economy and slow growth," said Goss.
--MISSOURI: "Missouri is beginning to feel the impact from the GM strike. The overall June index for the state is at 53.9, down from May's 55.2. Missouri purchasing managers once again reported drops in both new orders and production, along with a decline in employment, pushing down the overall index. Depending on how long the auto workers strike lasts, we could see a larger impact from the strike in the next few months,"said Goss. The Missouri new orders index for June was 51.3, down from May's 54.8. The production index was at 59.0, down from 60.0 in May. Employment in June was at 55.0, down from 58.1 in May.
--NEBRASKA: "A wet spring had quite an impact on employment in the construction industry during May and April, slowing overall growth in Nebraska's economy. Now that things are drying out we should see economic activity picking up again," said Goss. Nebraska purchasers reported an overall index of 58.3, up from May's 55.6. Production increased slightly to 59.3, from May's 55.7. New orders were at 60.4, up from 55.6 in May. "As with other states in the Mid-America region the growth of the economy in Nebraska continues, but at a slower pace than past months. Overall, Nebraska's economy looks fairly strong,"said Goss.
--NORTH DAKOTA: The overall index for June was 53.7, down from 56.3 in May. "Both durables and non-durables manufacturers in North Dakota report solid growth despite problems in exports. The economy continues to grow, just not as much as we've seen in past months," Goss said. The employment index for June was down slightly at 66.7, compared to 68.8 in May.
--OKLAHOMA: Oklahoma purchasing managers reported an overall index of 45.3, down from 58.8 in May. "The effects of the GM strike in Oklahoma are appearing now and depending on how long the strike lasts we could could see a larger impact on the economy in the coming months. Growth continues to slow. Softness in the energy sector may also be having an impact on the overall rate of growth in Okalahoma. While the index is below 50, it is not at the contractionary level," said Goss.
--SOUTH DAKOTA: The South Dakota index for June was 57.5, down from 67.3 in May. "While the production index dropped from 70 in May, to 60 in June, South Dakota continues to show solid growth. While new orders are down, June's index of 56.7, is still in the growth range. The impact from problems in the farm sector and exports is evident in the economy though," said Goss. The employment index remained unchanged at 60.0. -30-
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