Mid-America economy in June shows an advance above growth neutral

June survey highlights from the Mid-America Business Conditions Index show that for a ninth straight month, the overall index rose above growth neutral.

On average, bankers estimated that farmland prices declined by 4.0 percent over the past 12 months and expect farmland prices to fall by another 3.2 percent over the next 12 months, according to the index.

Approximately one-fifth of bank CEOs expect low farm income and falling farmland prices to present the greatest challenge to banking operations over the next five years, and loan demand by farmers remains strong.

The index shows that after falling below growth neutral for three straight months, the overall index bounced into positive territory for June. The Business Conditions Index, which ranges between 0 and 100, increased to 50.3 from May’s 43.5.

“While the June reading was much higher than I expected, it provides no grounds for celebration.  June’s above growth neutral reading indicates that between May and June, business conditions improved. It will take many months of above 50.0 before the regional economy returns to pre-Covid-19 levels,” Ernie Goss said. Goss is director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.

The Kansas Business Conditions Index for June increased to 45.1 from May’s 42.8. Components of the leading economic indicator from the monthly survey of supply managers for June were: new orders at 57.1, production or sales at 30.1, delivery lead time at 46.6, employment at 38.2, and inventories at 53.6. “Since the onset of COVID-19, the state has lost more than 108,000 jobs, or approximately 7.6% of its employment. Our surveys point to a flattening of employment with only slight job gains in the months ahead,” Goss said.

The June Business Conditions Index for Missouri climbed to 50.5 from 42.3 in May. Components of the overall index from the survey of supply managers for June were: new orders at 51.3, production or sales at 56.0, delivery lead time at 49.8, inventories at 50.8, and employment at 44.6. “Since the onset of COVID-19, the state has lost 262,000 jobs, or approximately 9.0% of its employment. Our surveys point to a flattening of employment with only slight job gains in the months ahead,” Goss said.