Colorado business index rises as job prospects improve
A monthly measure of business conditions in Colorado continues to rise even as prospects for job growth improve.
The Business Conditions Index rose 2.5 points in March to 59.6 on stronger readings for new orders, production and sales.
“Our surveys over the past several months indicate that the region will add another 60,000 jobs by the end of the first quarter of 2012,” said Ernie Goss, director of the Goss Institute for Economic Research in Denver.
Goss calculates the Business Conditions Index for the mountain states of Colorado, Utah and Wyoming based on the results of monthly surveys of supply managers in the three states. the index ranges from 0 to 100. Readings above 50 forecast expanding economic conditions over the next three to six months.
In Colorado, the overall index reflected higher component readings for new orders at 77.7 and production or sales at 77.9.
The reading for employment slipped 1.4 points to 53.5, but Goss expects Colorado to regain some of the jobs lost during the recession. Between December 2007 and March 2010, the state lost about 133,000 jobs, he said. Over the past year, nonfarm payrolls have grown 13,800. Goss expects payrolls to increase another 60,000 over the next year, leaving state employment down 2.8 percent since the beginning of the recession.
The combined Business Conditions Index for the mountain states rose 1.7 points to 61.2 in March as the index remained above growth-neutral 50 for a 17th consecutive month.
“An expanding energy sector and the export of manufacturing goods continue to be important sources of growth for the region,” Goss said.
The regional index reflected higher component readings for new orders at 67.6, production or sales at 67.2 and employment at 55.6. “After many months or rising new orders, sales and productivity, firms in the region have begun to hire more rapidly,” Goss said. “I expect this trend to continue and strengthen in the months ahead.”
Supply managers in the three states responding to the March survey were slightly more upbeat in their expectations for the next six months, pushing the component reading for confidence up nearly six points to 61.9.
The threat of inflation looms, however. The reading for prices paid, a measure of wholesale inflation, surged nearly 14 points to 86.9. The reading has remained above growth-neutral 50 for 21 out of the last 22 months. “We continue to record unacceptably high inflationary pressures at the wholesale level,” Goss said, adding disruptions of supplies and products from Japan in the wake of widespread damage from the earthquake and tsunami there will add still more pressure.
Component readings for trade fell with new export orders at 62.6 and imports at 57.2. Still, an expanding global economy continues to stimulate exports, Goss said.
In Utah, the Business Conditions Index held steady at 59.8 despite higher component readings for new orders at 64.6, production or sales at 64.5 and employment at 53.6.
In Wyoming, the Business Conditions Index advanced 2.4 points to 69 on higher readings for new orders at 76 and production or sales at 73.1. The reading for employment fell more than 13 points to 68.1.