Slumping numbers in a July survey suggest there will be slow to no economic growth over the next three to six months in nine Midwest and Plains states, including Nebraska.
But that contradicts another predictive economic index from the University of Nebraska-Lincoln that shows strength in the state's economy persisting into the next year.
The overall Mid-America Business Conditions Index created by Creighton University economist Ernie Goss dropped to 50.6 in July from 53.0 in June. A number above 50 shows expansion.
"Businesses tied to agriculture and energy continue to report pullbacks in economic activity, and this is spilling over into the broader regional economy," Goss said.
The survey of supply managers is compiled into indexes ranging from zero to 100. The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
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Looking ahead six months, the value of the July business confidence index plummeted to 52.4 from June's 59.9. Sinking agriculture and energy commodity prices pushed supply managers' expectations lower, Goss said.
After remaining above growth neutral for 19 straight months, the index specific to Nebraska dropped to 48.6 in July, compared with 51.3 in June.
"Durable-goods manufacturing, especially those tied to agriculture, cut jobs and experienced pullbacks in economic activity for the month," Goss said. "Nondurable-goods producers are also reporting weaker economic activity."
Those indexes contradict Nebraska’s Leading Economic Indicator, which continued to climb in June, suggesting strong economic growth through the end of 2015.
The indicator, a composite of six factors that predict economic growth, has risen in five of the last six months. It's compiled by faculty and students in the Economics Department and the Bureau of Business Research at the University of Nebraska-Lincoln.
Respondents to one factor, the June Survey of Nebraska Business, were optimistic about both sales and job growth at their businesses over the next six months. Of the other components, manufacturing hours declined in June, and the U.S. dollar increased in value, which makes exports more expensive. Airline passenger counts and building permits for single-family homes showed little change.
Goss and Eric Thompson, director of the Bureau of Business Research, pointed out that the indexes are derived from different data.
"Our results are based on a survey of supply managers," Goss said, and it is heavily weighted toward manufacturing. UNL’s survey is based on a broader range of occupations and industries.
Thompson pointed out that his indicator uses a lot of other data, in addition to a survey, the five other components.
"So, it is certainly possible for the two indicators to diverge, and I would argue that my Leading Economic Indicator - Nebraska utilizes a broader group of indicators," Thompson said.
Goss pointed out that a 3-month moving average of job growth for Nebraska was not good, and actually showed a decline in that number from a year earlier.
The latest long-term economic forecast by the Bureau of Business Research showed the creation of new jobs in Nebraska will be limited by a decline in farm income of nearly 45 percent this year and the fact that Nebraska already has low unemployment and modest population growth of 0.6 percent to 0.7 percent annually.
"The bottom line is that Nebraska cannot get too complacent with the lowest unemployment rate in the nation," Goss said in an email. "Low unemployment rates are just one measure (and not a good one) of the economy."
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