Lincoln (Neb.) - Sept. 30, 1999 - Nebraska's economy continued its strong upward momentum in the second quarter of 1999, despite the adverse effects of depressed farm commodity prices, according the latest Nebraska Quarterly Business Conditions Survey.
Reported in the September issue of Business in Nebraska, the statewide survey showed that 41 percent of nearly 1,400 participating businesses had second-quarter revenues higher than year-ago levels while only 28 percent reported second-quarter revenues lower than year-ago levels. Both figures are statistically unchanged from 1997-98 quarterly averages, said Charles Lamphear, director of the University of Nebraska- Lincoln's Bureau of Business Research, publisher of the Business in Nebraska newsletter.
The survey said metro businesses are doing better than their nonmetro counterparts, with 49 percent of metro businesses reporting revenue gains over a year ago, compared to 34 percent of nonmetro businesses. That gap, Lamphear said, "likely is due to the longer-term trend in the economic growth gap between metro and nonmetro counties than the current farm crisis."
The survey indicated that the farm crisis' heaviest effects have been felt in the wholesale trade sector. Only 21 percent of nonmetro businesses in the sector (which includes farm implement dealers and grain handlers) reported revenue gains over second quarter 1998, while 57 percent reported revenue losses over the same period. That, Lamphear said, was the highest rate of decline reported by any business sector in the 12-quarter history of the survey. Hardest hit were the panhandle and central areas, where 68 percent of wholesale trade respondents reported decreased revenue from year-ago levels.
"However, the latest survey results indicate that the farm crisis is affecting only a small number of other nonmetro businesses," Lamphear wrote. He said there are a number of possible reasons for that, including:
- Most farmers did not cut back on operating expenses during the planting and growing seasons, and because of the expected high yields, it is unlikely that they will be able to cut back on expenses during harvest;
- The strong national economy has benefited both urban and rural businesses that market nationally; and
- Seventy to 85 percent of nonmetro personal income represents fixed income such as transfer payments (e.g., Social Security payments), earnings from interest and dividends, and wages and salaries for government workers.
"Since approximately three out of every four dollars of nonmetro personal income is unaffected by farming, most rural businesses likely will not experience any significant impact from the current farm crisis," Lamphear said.
The state's economy continued to create new jobs in the quarter, including an estimated 19,179 new full-time jobs and 6,063 part-time jobs.
"The level of job growth is impressive, especially in light of the state's very low unemployment rate and its very high labor force participation rate. Certainly, it is persuasive evidence of a continuing strong economy," Lamphear said.
The UNL economist said most businesses, especially in vocational trades and those relying on service workers, continue to have a difficult time attracting and keeping qualified workers. Statewide, an estimated 11,521 full-time jobs went unfilled in the second quarter, nearly half going unfilled due to a lack of qualified workers.
The Nebraska Quarterly Business Conditions Survey is
produced by the Bureau of Business Research and the Nebraska
Departments of Economic Development and Labor.
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