OMAHA, Neb. (AP) - Higher interest rates and energy costs cooled growth and lowered confidence last month in the Mid-America region's economy, says a monthly survey of supply managers and business leaders in the nine-state region.

North Dakota, however, continues to add jobs, Creighton University economics professor Ernie Goss said.

"North Dakota has added jobs at roughly twice the pace of the region and nation for 2005," Goss said. "Based on our data and government data, I expect this positive gap to continue well into the first quarter of 2006."

The region's overall index in the Mid-America Business Conditions Survey was 58.3, down from 59.9 in September, while the confidence index dropped to 45.5 - its lowest mark since September of 2001.

North Dakota's overall index rose to 63.3 in October from September's 62.9, Goss said.

The overall index, called the Business Conditions Index, ranges between zero and 100. An index number of 50 or higher indicates an expansionary economy over the next three to six months.

"Supply disruptions from hurricanes in the Gulf, a jump in energy costs and rising short-term interest rates have certainly played a major role in the decline in confidence among supply managers and business leaders in the region," Goss said Tuesday.

The overall index, called the Business Conditions Index, ranges between zero and 100.

The region's prices paid index of 84.3 changed little from 85.9 in September, but still reflected significant inflation at the commodity and wholesale level.

"Because most inflation gauges, such as the prices paid index, show mounting inflationary pressures, I expect the Federal Reserve Open Market Committee to continue raising interest rates at its meeting on November 1," Goss said in a statement. The increase would be the 12th since June of last year, he said.

"I also expect the (committee) to raise the funds rate at its December 13th meeting," Goss said.

"As I have stated in previous reports, I am concerned that the Fed is overreacting to the sharp upturn in energy prices," said Goss, the director of the Creighton Economic Forecasting Group.

"There is scant evidence that higher energy prices have spilled over into other nonenergy-related prices," he said. "However, the continued increase in the short-term interest rates will curtail growth in the nine-state region and the U.S. in the months ahead."

The region's employment index rose slightly last month, to 54.7 from 53.6 in September.

"The gap between hiring among durable goods and nondurable goods manufacturers widened even more as heavy manufacturers reported solid employment gains with an October employment index of 62.7, while nondurable manufacturers detailed static hiring with an October employment reading of 50.7," Goss said.

New export orders dropped to 50.0 as the imports index rose to 58.6.

"Data from the Mid-American region mirror those for the nation," Goss said.

"Weaker exports, stemming from economic weakness among our trading partners, and rising imports, springing from higher oil prices, have pushed regional and national trade numbers in a bearish direction," he said. "These numbers do not bode well for the trade deficit for the rest of 2005 and for the first quarter of 2006."

Other figures from October: new orders 59.5; production 61.9; inventories 54.5; and delivery lead time 57.7.

The delivery lead time index figure is the highest since September 2004. The index reflects supply disruptions and has leaped since the Gulf hurricanes.

The Creighton Economic Forecasting Group has conducted the business conditions survey in nine states since 1994: Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.