State falls under 50 on business index

Kansas was the only state in the Mid-America region that slipped into negative economic growth in July, according to a Creighton University study.

The Business Conditions Index study by Creighton professor Ernie Goss had Kansas as the only one of nine states recording an overall index in July below 50, or growth neutral.

For Kansas, the leading economic indicator declined for a second consecutive month. The 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.

Goss said durable goods producers in the state have reported pullbacks in economic activity.

"These declines are spilling over into the overall economy," Goss said in a release. "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."

Regionally, the index dipped in July to 60.8 from 62.5 in June and 64.2 in May, Goss said. July marked 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."

Goss said regional employment continues to grow, with the region adding jobs an at annualized rate of 1.7 percent for the first half of the year.

"While I do expect job growth in the second half of 2010, the rate will be down from the first half. Unemployment rates will remain unacceptably high," Goss said.

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