May 27, 2015

Nebraska unemployment rate drops, again

Nebraska’s unemployment rate continues to drop, now at 2.5%.

The Nebraska Department of Labor has announced the state unemployment rate for April dropped a tenth of a percent from March to settle at 2.5%, down nearly a full percentage point from a year ago.

According to the department, Nebraska’s total nonfarm employment topped one million, reaching 1,003,662, up by nearly 11,000 from March. Education and health services demonstrated the strongest job growth in April, up nearly 5,000 jobs. The categories of “other services” and financial activities also showed strong growth.

State officials report the Omaha area unemployment rate in April was 2.8% and the rate in Lincoln was 2.1%.

The national unemployment rate is 5.4%, also down a tenth of a percent.

Click here for more on the state unemployment rate.

 

Banks become cautious as farm income falters

corn field 2Farm income is falling across the region as credit conditions weaken.

Nathan Kauffman, the Omaha branch executive with the Federal Reserve Bank of Kansas City, says lower crop prices and high input costs have cut profit margins and raised concerns about the ability of farmers to repay loans down the road.

“In the last several years, profits have been so good in agriculture that a lot of people have been making pretty good money,” Kauffman says. “Now, a lot of bankers and other lenders are looking at where the risks are, wanting to understand what level of working capital do their borrowers have, is it sufficient to get them through these times?”

Recent years have brought many producers across the Midwest severe droughts and flooding while commodity prices rebounded only slightly after dramatic drops, while facing higher costs for seed, fertilizer and chemicals. It’s left many farmers short on cash.

“Operating loans have picked up because of lower incomes,” Kauffman says. “There has been a need for more financing of some of those short-term expenditures and I think we’re seeing more lenders that just want to be cautious and recognizing things are still pretty good overall and they have been very good, but being cautious about what that means for the next year or so.”

Kauffman says cropland values edged down in the first quarter this year while pastureland values held firm.

“The land that’s very high quality still does seem to be selling quite well,” Kauffman says. “The land that is maybe not quite as good, we do see some variation there. There are stories of no sales at auctions, we see other weaknesses in that side of the land market but overall, there has been a bit of downward pressure because of the lower incomes.”

Profit margins in the livestock industry have remained stable, but he says most bankers don’t think farm income or credit conditions will improve in the next three months.

By Jerry Oster, WNAX, Yankton

 

New Siouxland pork plant to bring 1,100 jobs

HogsTwo companies are announcing plans to build a $264 million pork processing plant in Sioux City, Iowa.

Officials with Triumph Foods and Seaboard Foods say the venture will create 1,100 jobs. But, the city manager for Sioux City, Bob Padmore, says the economic benefits for the area extend far beyond the new jobs.

“The project will generate approximately $3.5 million in annual property taxes following the fulfillment of incentives provided to the project,” Padmore said. “The demands for supplies and services from the Seaboard/Triumph plant will increase business for existing businesses in our community.”

Construction on the plant, to be located in an industrial park north of Sioux Gateway Airport, will begin later this year.

Seaboard Foods President and CEO Terry Holton is originally from Cherokee, Iowa and lived in South Sioux City for 13 years while working at the IBP beef plant in nearby Dakota City, Nebraska. Seaboard is based in Kansas.

“To really bring this project kind of home, for me, is really exciting and I really look forward to it,” Holton said. “I think the community of Sioux City is the best community for us to have this project…and the city has done a fantastic job of making sure there is a viable site.”

The plant will cover about 250 acres and will process around three-million hogs annually.

Triumph Foods CEO Mark Campbell noted the facility will be similar to their St. Joseph, Missouri plant, with an “environmentally friendly design” and technology to cut down on odor.

“We expect to incorporate the most modern technologies in food safety, animal handling, and technologies in the food processing industry known today,” Campbell said.

The plant is expected to be up and running by summer 2017. Plant officials are seeking tax incentives from Sioux City, as well as state tax breaks. The Iowa Economic Development Authority Board is scheduled to consider an incentive package for the plant on May 22.

By Woody Gottburg, KSCJ, Sioux City

 

April’s Mid-American Business Conditions Index report

The latest Mid-America Business Conditions Index for April in nine Midwestern states points to slow economic growth ahead. Creighton University Economist Ernie Goss says the overall index for the month of April rose to 52.7 from March’s 51.4.

Goss says, “Firms linked to energy and agriculture are experiencing pullbacks in economic activity. Growth in Oklahoma and North Dakota, two energy producing sates, is approximately one-third to one-half of what it was one year ago. That growth is likely to move even lower in the months ahead as the strong U-S dollar slows growth even more.”

Goss also asked business managers about hiring and says approximately 29.1% reported a shortage of applicants for open positions. This is up slightly from 27.1% in November. Goss says even with job cuts there is a labor shortage for more skilled workers.

Looking ahead, Goss says the business confidence index grew to 61.5 in April from 55.7 in March. He says businesses surveyed on their predicted sales price growth over the next year and that came in at 1.6%, less than what the Feds predicted.

For the 17th straight month, Nebraska’s Business Conditions Index remained above growth neutral 50. The leading economic indicator for April grew to a regional high of 54.6 from March’s 51.8. Goss says, “Nebraska’s exports expanded by more than six percent to a record high of $7.9 billion for 2014. The strong U-S dollar will push 2015 export growth into negative territory even as the overall state economy grows but at a slower pace than in 2014.”

Baby Boomer retirement = economic concerns

There is big concern over a recent poll showing 28% of all Americans have less than $1,000 saved for retirement and 57% with less than $25,000. Creighton University Economist Ernie Goss says 100-thousand baby boomers retire every day and too many people are getting into the “economic wagon” and too few are pushing it.

Goss says, “Of course, somebody has to pay the bill for that and unfortunately that will fall to those younger than us.”

Goss says there are three possible outcomes to that equation and all three mean bad news for individuals. Those outcomes are higher taxes, inflation or higher interest rates.