Farm prosperity fueling Midwest region's economic engine - KTTC Rochester, Austin, Mason City News, Weather and Sports

Farm prosperity fueling Midwest region's economic engine


ROCHESTER (KTTC) -- Farmers brought in a record corn and soybean harvest in Minnesota and much of Iowa this year, and now their prosperity is rippling through the Midwest regional economy and creating a new optimism for 2011.

Those are among the significant findings of the Creighton Economic Forecasting Group from Creighton University in Omaha, Nebraska, after studying the economic forces at work in nine states in the region.

"Strength in the region's agricultural and energy sectors is spilling over into the rest of the area economy," said Creighton University Economics Professor Ernie Goss.  "For example, farmers have stepped up their buying of agricultural equipment, which has bolstered growth among the manufacturers and sellers of farm equipment and trucks."

A strong performance in the agriculture and energy sectors is pushing forecasts of economic growth in the mid-America region for three to six months from now.

The Creighton team says Minnesota's Business Conditions Index climbed to a healthy 56.2 from October's 52.8, rising for the first time since June.

The November survey represented the 16th straight month that Minnesota's index was above growth neutral. Components of the overall index for November were new orders at 57.7, production or sales at 61.1, delivery lead time at 48.2, inventories at 64.9 and employment at 49.1.

"Both durable and nondurable goods producers in the state are experiencing very healthy business conditions with increases in both domestic and export sales. Computer and electronic component producers are reporting improving economic conditions," said Goss.

Based on a review of the economic indicators from supply managers in the nine Midwest states, the region is forecast to grow at a slow to modest pace in the months ahead.  The overall index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time.

Job creation continues to be "fragile" across the region; the Creighton economists say for November, 21.2 percent of firms reported increases in employment while 15.3 percent detailed pullbacks in company employment levels.

"Relative job growth shows clearly that the Mid-America region is outperforming the nation. For 2010, the Mid-America region is on track to add jobs at a pace of 1.3 percent while the U.S. will gain jobs at a much weaker 0.8 percent rate. I expect this gap to continue into the first quarter of 2011," said Goss, director of Creighton's Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics.

The study group says November saw the second straight "significant increase" in the business confidence index.  Goss says this is a measurable sort of economic optimism and because individual companies are seeing solid improvements in business conditions, this is translating into a strong economic outlook.

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