Mid-America economy deteriorates in Nov - survey

CHICAGO Dec 1 (Reuters) - Business conditions in nine U.S. Midwest and South-Central states deteriorated in November, opening up the possibility of a double-dip recession for the region, according to survey results released on Tuesday.

Creighton University's Business Conditions Index dropped to 47.5 in November -- the lowest level since May -- from 51.8 in October. A reading of 50 is considered growth neutral, with readings above that indicating expansion over the next three to six months.

"This month's plunge below growth neutral raises the possibility of a double-dip recession for the region," said Creighton University Economics Professor Ernie Goss in a statement.

He added that the downturn has been particularly hard for rural areas as "the significant decline in farm income for 2009 continues to weigh on firms with strong ties to agriculture."

The survey's employment index also declined, falling to 46.1 in November from 50.0 in October.

"Based on recent survey results, I expect the region to continue to lose jobs with unemployment rates rising slightly," Goss said.

Over 41 percent of the survey's respondents said they anticipate layoffs at their companies, while only 48 percent expected pay increases in 2010.

Meanwhile, the survey's prices-paid index, which tracks the cost of raw materials and supplies, slipped to 68.0 in November from 68.9 in October.

"Our wholesale inflation gauge is pointing to elevated inflation at the consumer level as early as the middle of 2010 in my judgment," Goss said.

Supply managers were surveyed in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

The Omaha, Nebraska-based Creighton Economic Forecasting Group has conducted the monthly survey since 1994, using the same methodology as the national Institute for Supply Management. (Reporting by Karen Pierog, Editing by Chizu Nomiyama) ((karen.pierog@thomsonreuters.com; Tel: +1 312 408 8647; Reuters Messaging: karen.pierog.reuters.com@reuters.net))