Colorado index retreats, but forecasts growth

A monthly index tracking business conditions in Colorado has lost some of the ground gained over the past two months, but continues to forecast growth.

The Business Conditions Index retreated 2.5 points in April to 58.9. The loss followed two months of gains in which the index climbed nearly four points.

Ernie Goss

Still, the outlook remains encouraging, said Ernie Goss, director of the Goss Institute for Economic Research in Denver. “Metal manufacturers in the state are experiencing very health growth stemming from international markets. Construction activity is improving in the state. This is having a positive influence on firms that we survey.”

Goss calculates the Business Conditions Index for Colorado, Utah and Wyoming based on the results of monthly surveys of supply managers in the three mountain 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 reading reflected lower component scores for new orders at 59.9 and production or sales at 60.6. The score for employment, however, jumped more than seven points to 67.7.

“Both durable and nondurable goods manufacturers in the state are adding jobs at a healthy pace,” Goss said. “Manufacturers tied to energy, agriculture and dependent on sales abroad are experiencing especially strong growth. As a result of this solid expansion, I expect the unemployment rate to continue to decline in the months ahead.”

The overall reading for the three mountain states fell nearly four points in April, but at 58.8 reflects “healthy” conditions, Goss said. The index has remained above growth-neutral 50 for 30 straight months.

“According to our surveys over the past several months, the regional growth advantage will continue in the months ahead,” Goss said.

“Expansions for the region’s technology sector, both manufacturing and value-added services, were important sources of growth for the month.”

The overall index reading for the mountain states reflected lower component scores for new orders at 58.5 and production or sales at 60.8. The score for employment edged up three-tenths of a point to 62.2.

“Employment growth in the region remains much stronger than that in the national economy,” Goss said. “However, the growth is very geographically diverse across the three-state region with some areas continuing to be negatively affected by the housing sector while others are reporting labor shortages connected to a rapidly expanding manufacturing sector.”

A component of the index measuring confidence among supply managers in the three states rose three-tenths of a point to 60.7. “Recent downturns in fuel prices and an improving regional job market more than offset concerns about the national and global economies, especially Europe,” Goss said.

Supply managers also reported adding to inventories of raw supplies and materials in April for a 29th straight month of inventory growth. Nonetheless, the score for inventories fell more than eight points to 55.6.

The reading for prices paid, a measure of wholesale inflation, fell 3.5 points to 72.3. “Even as prices for certain inputs continue to grow at an unsustainable pace, this pullback in overall input prices is very good news,” Goss said.

Supply managers responding to the survey upon which the April index was based projected a 2.2 percent increase in prices for input purchases for 2012, he said.

The score for exports fell six points in April to 55.9, while the score for imports rose more than three points to 57.4.

In Utah, the Business Conditions Index fell more than five points, but at 56 continues to forecast growth. The overall reading reflected lower component scores for new orders at 56.9, production or sales at 59.1 and employment at 58.9.

In Wyoming, the Business Conditions Index slipped nearly two points to 68.5, but remained above growth-neutral 50 for a 30th consecutive month. The overall reading reflected lower component scores for new orders at 55.2, production or sales at 63.1 and employment at 68.5.


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Posted by on May 1 2012. Filed under Business News, Trends. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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