Colorado business index retreats, but still forecasts growth
An index tracking business conditions in Colorado has slipped, but continues to forecast growth in coming months. The Business Conditions Index fell nearly six points in September, but at 53.3 remains above growth-neutral 50.
So far this year, the index has ranged between a low of 49.6 in July and a high of 61.4 in March. At this time last year, the index stood at 51.9.
“Durable goods manufacturers, including computer and electronic producers and transportation equipment manufacturers, are experiencing solid upturns in economic activity,” said Ernie Goss, director of the Goss Institute for Economic Research in Denver. “Colorado nondurable is also expanding sales and employment.”
Goss calculates the Business Conditions Index for the mountain states of Colorado, Utah and Wyoming based on monthly surveys of supply managers in the three states. Readings range from 0 to 100. Readings above 50 forecast expanding economic conditions over the next three to six months.
In Colorado, the overall index reflected lower component readings for new orders at 52.2, production or sales at 58 and employment at 51.8.
The Business Conditions Index for the mountain states climbed two points in September to 61 for its highest reading since March. The index has remained above growth-neutral 50 for 35 consecutive months.
“Energy and exports continue to fuel expansions among the region’s durable and nondurable goods manufacturers,” Goss said. “The growth gap between the mountain states economy and the U.S. economic is widening as the national economy continues to slow.”
The overall reading for the three states reflected higher component readings for new orders at 61.7 and production or sales at 68.1.
The reading for employment slipped more than a point to 58, but still reflects comparably healthy labor conditions, Goss said. “Over the last three months, employment growth in the region has remained strong while the nation’s job growth has fallen significantly.”
A component of the index tracking confidence among supply managers in the three states rose almost three points, but at 49.5 continues to reflect a mostly pessimistic outlook, Goss said. “Supply managers, much like the entire business sector, remain very pessimistic regarding future economic conditions. The looming fiscal cliff, the elections and European economic turmoil are all weighing on economic confidence.”
A component of the index tracking inventories reflects additions to raw materials and supplies despite a more than two-point drop to 63.3. “We have recorded inventory growth for 34 straight months,” Goss said.
“Healthy inventory growth signals that supply managers expect production expansions in the months ahead.”
The reading for prices paid, a measure of wholesale inflation, rose more than five points to 71.1. Supply managers responding to the survey upon which the September index was based said they expect the prices of products and services they purchase to increase an average of 2.8 percent over the next six months.
The reading for imports rose nearly three points to 57.3, while the reading for new export orders jumped more than eight points to 56.6.
“Healthy regional growth bolstered buying from abroad by mountain states firms. At the same time, manufacturers in the region experienced healthy gains in sales abroad,” Goss said.
In Utah, the Business Conditions Index climbed more than a point to 61.7 in September on higher component readings for new orders at 62.7, production or sales at 70.8 and employment at 54.4.
In Wyoming, the Business Conditions Index advanced nearly 10 points to 64 on higher component readings for new orders at 63.2, production or sales at 67.9 and employment at 61.1.