For the third time in the past four months, a leading economic indicator for Iowa and an eight-state region is pointing to negative growth in the next three to six months.
The Mid-America Business Conditions Index is compiled by Creighton University in Omaha from a survey of purchasing managers in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The overall October Business Conditions Index, which ranges between zero and 100, slumped to 46.5 from September’s tepid 50.4. The reading of 46.5 is the lowest level since May 2009.
An index greater than 50 indicates an expanding economy over the course of the next three to six months.
Ernie Goss, director of Creighton University’s Economic Forecasting Group, said the growth in the regional economy is definitely moving lower.
“Surveys over the past several months point to slightly negative growth for the next three to six months,” Goss said. “However as in past months, two states with significant dependence on energy, North Dakota and Oklahoma, will continue to expand at a positive pace while the rest of the region pulls back.”
The region’s employment gauge remained below growth neutral at 47.7, up from September’s 46.1 but down from August’s 49.5.
“These are the weakest job readings recorded since shortly after the recession ended in 2009,” Goss said. “The manufacturing sector has been shedding jobs over the past several months.
“U.S. Bureau of Labor Statistics data for September indicate that the region lost more than just manufacturing jobs in September of this year. When this data are released for October later in November, I expect it to show that the region continues to shed jobs but at a slow pace.”
Iowa’s October Business Conditions Index declined to 54.2 from 56.5 in September. The overall index has remained above growth neutral for the last 34 months.
“According to U.S. Bureau of Labor Statistics, the state’s unemployment rate plunged in September,” Goss said. “While our survey of Iowa businesses over the past several months have been positive and pointing to reduced unemployment and job gains, they have not been nearly as robust as BLS data indicate.
“I expect significant upward revisions to the Iowa unemployment data in the months ahead even as the state continues to grow, but at a very modest pace.”
The national unemployment rate and employment numbers for October will be released Friday by the U.S. Department of Labor’s Bureau of Labor Statistics. It will be the final release of employment information before Tuesday’s election.
The Creighton Economic Forecasting Group has conducted the monthly survey of supply managers in nine states since 1994 to produce leading economic indicators of the Mid-America economy.