Midwest manufacturing index increases first time since May

OMAHA, Neb. (AP) _ Oklahoma's overall score on a midwest business index declined in September for the fifth straight month. <br/><br/>The state's score on the Mid-America Business Conditions Index

Friday, October 1st 2004, 12:41 pm

By: News On 6

OMAHA, Neb. (AP) _ Oklahoma's overall score on a midwest business index declined in September for the fifth straight month.

The state's score on the Mid-America Business Conditions Index was 54.8 in September, down from 55.2 in August.

Readings above 50 mean the manufacturing sector is expanding, while a figure below 50 represents a contraction. The national index has been above 50 since June 2003.

``While we are tracking pullbacks in the states growth, readings from the survey indicate that Oklahoma's economy will continue to expand well into 2005, albeit at a slower pace,'' said Ernie Goss, an economist at Creighton University who conducts the survey.

Components of Oklahoma's overall index last month were new orders at 55, production at 55.1, delivery speed at 50, inventories at 60 and employment at 54.2.

Across the region, Midwest manufacturing grew in September despite higher prices.

The region's overall index increased in September to 63.9 from August's 61.3. September's upturn was the index's first advance since a relative slowing that began in June.

The prices-paid index, however, rose to its second highest level in 10 years at 88.3, up from August's 88.1.

A similar, national index also showed growth, though at a more gradual pace than in August. The Institute for Supply Management said that its manufacturing index registered 58.5 in September, down from 59 in the previous month, and slightly higher than the 58.3 reading forecast by analysts.

Readings above 50 mean the manufacturing sector is expanding, while a figure below 50 represents a contraction. The national index has been above 50 since June 2003.

In the Midwest, light and nondurable goods manufacturing, which includes things like fertilizer and beverage production, was stronger for the first time in several months than services and durable goods, which includes agriculture equipment, aircraft and automobile production, Goss said.

``Higher energy prices and interest rates have cooled growth for durable goods manufacturers in the region,'' Goss said.

An employment index at 60 indicated job gains, but at a slower pace compared with last month's 61.3, Goss said.

The nine-state region, which includes Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota, has added nearly 95,000 jobs for the first three quarters of 2004, Goss said.

However, high prices for energy and other commodities has slowed the job growth and will continue to produce a slower pace of job expansion for the fourth quarter, Goss said.

``As anticipated, this prolonged upward trend in inflationary pressures in the region is having an impact on confidence, which declined to 64.8, its lowest reading since the beginning of the Iraq war,'' Goss said.

Strong new orders at 66.6 and production at 68.9 were primarily responsible for September's gains, Goss said.

Firms reported solid growth in new export orders, with a September reading of 54.2, up from August's weaker 51.1, Goss said.