Midwest economic growth declines for the first time in 32 months, business survey says

A 'now hiring' sign hangs on the door of a Staples store in Lower Manhattan, January 4, 2019 in New York City. Following a strong December jobs report, U.S. stocks soared on Friday. In a television interview on Friday morning, National Economic Council Director Larry Kudlow said he believes there is 'no recession in sight.' (Photo by Drew Angerer/Getty Images)

OMAHA, Neb. — An August survey of business supply managers suggested economic growth in nine Midwest and Plains states declined, in part because of trade skirmishes, a report said Tuesday.

The Mid-America Business Conditions index dropped below growth neutral in August to hit 49.3, compared with 52.0 in July. The index had remained above growth neutral for 32 straight months, the report said.

“Weakness in the region’s farm and manufacturing sectors produced by tariffs and a global economic slowdown pulled regional growth below that of the nation,” said Creighton University economist Ernie Goss, who oversees the survey. “Based on our manufacturing survey over the past several months, I expect overall growth to slow and potentially move into negative territory in the months ahead.”

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

The August employment index plummeted to 45.1, its lowest level in 34 months, from 56.3 in July.

“For the last 12 months, Mid-America employment growth has been 0.7%, compared to a much higher 1.5% for the U.S.,” Goss said. “This month, as in July, approximately 40% of supply managers (who responded) reported that the shortage of qualified workers was the greatest economic challenge for their company for the next 12 months.”

The regional trade numbers were down again with both export orders and imports falling in the August survey. The index for new export orders sank to 39.6 from July’s 44.7, and the import index dropped to 42.3 from 43.8 in July.

Two-thirds of the supply managers who responded in August indicated that the trade war and tariffs were harming their companies.

The business confidence index plunged to 45.0 last month from 51.4 in July — a 35-month low.

“I expect business confidence to depend heavily on trade talks with China, the Federal Reserve’s interest rate actions in the weeks and months ahead, and recession signals from the nation’s financial markets,” Goss said.

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