Mid-America economic activity gauge hits record low (news)Submitted by christopher X on Fri, 01/02/2009 - 12:05
Fri Jan 2, 2009 10:47am EST
CHICAGO (Reuters) - An index of business conditions in nine U.S. Midwest and South-Central states hit a record low in December, indicating the recession would deepen in the months ahead, according to an economic survey released on Friday.
Supply managers and business leaders were surveyed in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
"This is stacking up to be the (Hurricane) Katrina of economic recessions, similar to what the U.S. experienced in the early 1980s, when the national unemployment rate soared above 10 percent," Creighton University Economics Professor Ernie Goss said in a statement. "While I expect the downturn for Mid-America to be a bit less steep, it will nonetheless be deeper than that for 2001."
Creighton University's Business Conditions Index fell to 33.0 last month from November's previous record low of 37.8. A reading of 50.0 is considered growth neutral over the next three to six months.
The survey's employment index also hit a record low at 34.5 in December, down from 39.0 in November.
"Job cuts were recorded across the broad sectors of durable and non-durable manufacturing as well as value-added services. I expect regional job losses to mount in the months ahead with rapidly rising unemployment rates for most states," Goss said.
The prices-paid index, which tracks the cost of raw materials and supplies, fell to an all-time low 33.0 in December, from 49.6 in November, indicating deflation was likely in the first half of 2009, Goss said.
The Omaha, Nebraska-based Creighton Economic Forecasting Group has conducted the monthly survey since 1994 using the same methodology as the national Institute for Supply Management.
The Institute for Supply Management said on Friday that U.S. factory activity fell to a 28-year low in December. Its index of national factory activity fell to 32.4 -- the lowest since 1980 -- from 36.2 in November. The ISM's jobs gauge also hit the lowest since 1982 and prices were the weakest since 1949.