Business Conditions Index for Kansas declines again

The Business Conditions Index for the Mid-America region dipped in July but still points to an expanding regional economy in the months ahead.

The monthly Business Conditions survey of supply managers in a nine-state region dipped to 60.8 from 62.5 in June and 64.2 in May, said Ernie Goss, the Creighton University economics professor who conducts the study. An index of 50.0 is considered growth neutral. July was the eighth straight month that the index was above growth neutral.

"Surveys over the past several months indicate that the economic recovery, which has been under way since last fall, will continue but at a weaker rate," he said. "I am concerned about some of the elements of our July survey. For example, while the new orders index remained above growth neutral, it took its biggest one month tumble in more than 10 years."

Kansas was the only state to record an overall index below growth neutral for July. In recent months, durable goods producers in the state have reported pullbacks in economic activity.

"These declines are spilling over into the overall economy," Goss said. "As a result, I expect overall job growth in the second half of 2010 to decline from current annualized growth of 1.4 percent to roughly half that pace."

For Kansas, the leading economic indicator declined for a second consecutive month. The July Business Conditions Index slipped to 49.3 from June's 51.1. Components of the overall index for July were new orders at 44.0; production, or sales, at 49.1; delivery lead time at 59.0; employment at 53.2; and inventories at 41.4.

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. States in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.