Survey suggests Kansas' economy will slow

An index of Kansas business conditions fell to its lowest level since April 2003, according to a survey released Tuesday.

The index declined to 47.5 from 59.4 in November. An index of more than 50 indicates an expanding economy over the course of the next three to six months.

Kansas will end the year with a gain of fewer than 500 manufacturing jobs, said Ernie Goss, a Creighton University economics professor and author of the Mid-America Business Conditions Survey.

Manufacturing job growth in the Wichita area was countered by losses in other parts of the state.

"Strong growth in aerospace manufacturing is being offset by weakness in nondurable goods production and in the information sector, including telecommunications," Goss said in a release.

In the wider nine-state Mid-America region included in the survey, inflation and growth continued to slow.

In addition to Kansas, states in the survey are Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

The region's overall Business Conditions Index, a leading economic indicator, declined to its lowest level since December 2002. The December index slumped to 53.8 from November's 54.1 and October's 55.1.

Inflation in the region also appears to be slowing. The index that tracks the cost of raw materials and supplies dropped to 68.3 from November's 69.4 and October's 73.1.

Goss expects the U.S. Federal Reserve to cut interest rates in the second quarter.

Supply managers' economic optimism six months out deteriorated as the confidence index slipped to 47.3 from November's 50.5 and October's 55.8.

"This is the lowest confidence index for the region since Hurricane Katrina pushed the outlook gauge to 45.5 in October 2005," he said.

The key regional economic stories for 2007, Goss said, will be agricultural commodity prices, the new farm bill, renewable energy production and beef and pork exports.