State Continues Economic Growth

THE JOURNAL RECORD, July 6, 1995 | Go to article overview
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State Continues Economic Growth

Oklahoma's economy is expected to continue to expand, according to a survey of purchasing managers.

Economic growth continued in the state in June even while growth stalled in a nine-state region in the central United States, according to an index of business conditions.

The Mid-American Business Conditions Index, which is based on a survey of purchasing managers, was 49 percent in June.

"This indicates that the Federal Reserve's efforts to slow the economy by raising interest rates are working, but they may be working too well," said Ernie Goss, a Creighton University economics professor who calculates the monthly index. "As a result, some individual states and even some regions may now face recession."

A slip below 50 percent signals that the economy is contracting, said Goss.

Oklahoma's economy continued to grow with a June index of 53.5 percent, which was down from May's 57.8 percent but still in the growth range.

"As one of only four states in the region reporting economic growth, Oklahoma to some extent is bucking the regional trend as the Sooner State reported a region-high production index of 56.8 percent and a region-high new orders index of 53.5 percent," Goss said. "These figures bode well for continued growth in the coming months, as does its confidence index of 61.4 percent, which also was the highest in the region."

Other states included in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota.

Continued economic growth for Oklahoma also was forecast by Craig Knutson, Southwestern Bell economist. He expects Oklahoma's economy will grow by 2 percent to 2.5 percent in 1995. Knutson's forecast was in the General Business Index released in mid-June.

"The Mid-American data and other economic indicators lead me to believe that the slowdown is significant enough to prompt the Fed to push interest rates down at either their August or September meeting," Goss said.

The June index continued a five-month downward trend that showed the region's economic growth slowing, Goss said.

An index above 50 percent indicates economic growth; below 50 percent reflects economic contraction. The indices in five of the region's nine states dropped below 50 percent in June.

Individual state indices for June ranged from a low of 46.2 percent in Nebraska to a high of 55.6 percent in North Dakota. Besides North Dakota and Oklahoma, Minnesota and South Dakota showed economic growth.

In what may be a sign that the area's economy could continue to shrink in the coming months, only Oklahoma had a new orders index over 50 percent, Goss said. Purchasers in Oklahoma reported the greatest strength in new orders at 53.5 percent, while Nebraska purchasers recorded the weakest new orders index of 38.4 percent.

Oklahoma reported the weakest employment at 47.7 percent; North Dakota reported the strongest with an index of 65.3 percent.

For the region, the production index dipped to 48.1 percent, compared with 53.3 percent in May, and the new orders index fell to 43.6 percent, compared with 51.2 percent in May. Employment remained in the growth range for June with an index of 52.1 percent and the price index eased to 72.8 percent.

Goss conducts a monthly survey of purchasers in the nine states to produce the leading economic indicator of the Mid-American economy. The survey is supported in part by purchasing management associations in those states.

Goss uses the same method as the National Association of Purchasing Management uses in its national survey of its members.

Mid-American Business Conditions Index reports for the other eight states in the survey showed:

Arkansas: Overall index for June was 47.6 percent, down sharply from 56.

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