Every month, Creighton University economics professor Ernie Goss surveys supply managers in a nine-state region, including Iowa. An index is developed from the survey and Goss says the August index was 48.4. It’s the first decline in the Mid-America Business Conditions Index since January.
"We had been moving out of the recession, at least according to supply managers, and now there’s this economic hiccup," Goss said. "Now we’ll have to wait and see what the next survey has in store for us. But right now, it was not a good report, certainly indicating at best that this recovery is very soft."
The overall index for August sank from July’s 51.7 and June’s 49.3. Anything above 50 is considered growth positive. Goss says supply managers continue to trim inventories and reduce costs. "They are trying to keep costs to a minimum. Inventory carrying costs to a minimum, employee cost to a minimum, benefit costs to a minimum…in other words, when you can’t grow your revenue, you tend to move toward costs and that’s what we’re seeing," Goss said.
Iowa’s Businesses Conditions Index is slightly better than the entire nine-state region, but slipped to 48.9 in August from 49.8 in July. Goss credits a downturn in farm income. "The farm economy is to some degree bringing down the rest of the overall economy, particularly in rural areas. Urban areas, particularly larger urban areas, are not seeing the impacts yet, so those are doing pretty well," Goss said.