NEBRASKA /A.P. NEWS
MID-AMERICA ECONOMY, INFLATION GROWING (with audio)
By John Axtell
Mar 2, 2010 - 8:00:42 AM

        Creighton University's monthly survey of business leaders and supply managers in 9 Midwest and Plains states for February indicates an economy that's growing more than expected, but showing signs of inflation ahead.

     Economist Ernie Goss...who's run the Mid-America survey since its start in 1994...says its overall index rose for the third straight month and jumped more than 6 points to 61, its highest level in nearly 3 years and well above the growth-neutral point of 50.

   Goss freely admits the strength shown in the February numbers surprised him, but is quick to add that it's still too soon to be proclaiming the recession is over.

     One reason for the strong February numbers is that inventory levels increased for the first time since September 2008, jumping from a negative 39.2 in December and 48.3 in January to a positive 57.6. Goss says that's encouraging on both the short term and for the rest of the year.
    
    The monthly survey does have some concerns for goss. One of the biggest is the prices-paid index, which tracks inflation at the wholesale level through the cost of raw materials and supplies.

     It rose about 3 points to 78.3, its 9th straight month above growth-neutral and more than twice what it was a year ago. Goss says the numbers point to a significant...but not frightening...level of inflation at the retail level in the coming months.
    
   Goss doesn't expect to see much change in unemployment rates in the Mid-America region in the immediate future, but does a little farther down the road because the business leaders and supply managers contacted for the survey are starting to add jobs

     The survey's confidence index...which measures how the respondents see things 6 months head...climbed 4-1/2 points to a strong 73.0. Goss credits a combination of record low interest rates, a stabilizing job market and the January improvement in the nation’s unemployment rate.

     Goss breaks down the survey by individual states as well as the full 9 state region. Nebraska's overall index was above break-even for the 6th straight month to 58.8 with new orders, production, delivery lead time and employment all above 60..
 
    Despite those positive numbers, Goss expects the second quarter of 2010 to see very modest overall job gains and only minimal gains in manufacturing...which lost more than 8,000 jobs or almost 9% of its base last year.

      South Dakota's overall index jumped 7 percentage points, to 61.4 with new orders at 73.2 and production at 68.5, but employment just barely on the growth side at 50.1 

    The state lost more than 21% of its manufacturing job base...almost 10,000 jobs...last year, and Goss is predicting a very minimal recovery in that sector and very modest overall job gains in the next 3 months.

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