Rising Colorado business index reflects job growth
A monthly index tracking business conditions in Colorado has increased even as manufacturers add jobs.
“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,” said Ernie Goss, director of the Goss Institute for Economic Research in Denver.
Goss calculates the Business Conditions Index, which for Colorado climbed more than two points to 61.4 in March.
Goss bases the index on the results of monthly surveys of supply managers in Colorado as well as Utah and Wyoming. Readings range from 0 to 100. Readings above 50 signal expanding conditions over the next three to six months.
In Colorado, the overall reading advanced on higher component readings for new orders at 67.8, production or sales at 66.9 and employment at 60.3.
The combined Business Conditions Index for the three mountain states edged down two-tenths of a point to 62.6 in March. The index has remained above growth-neutral 50 for 29 straight months, however, and Goss doesn’t foresee a downturn.
“Only a significant upturn in oil prices or a catastrophe such as last year’s Japanese tsunami will derail this expansion,” he said. “Thus far, higher gasoline and fuel prices have failed o slow growth in the region.
Firms with close ties to agriculture and energy as well as businesses selling internationally continue to lead the regional economy.”
The overall reading for the mountain states reflected mixed results for component readings. The reading for new orders rose to 64.8, while the reading for production or sales fell to 67. The reading for employment advanced to 61.9.
“Employment growth in the region is accelerating with reports of labor shortages for skilled manufacturing workers,” Goss said. “Over the past year, the region has added almost 86,000 jobs for annual growth of 2.7 percent. Based on our surveys over the past several months, this rapid growth should continue in the months ahead.”
A component of the index measuring confidence among supply managers in the three states advanced more than two points to 60.4. “Lower unemployment rates and an expanding national economy more than offset concerns surrounding higher energy and fuel prices,” Goss said.
The reading for prices paid, a measure of wholesale inflation, rose a point to 75.8 not only on higher prices for fuel, but also higher prices for raw materials and supplies.
In Utah, the Business Conditions Index slipped 1.4 points to 61.2 despite higher component readings for new orders at 63.9 and and employment at 59.6. The reading for production or sales fell to 65.1.
In Wyoming, the Business Conditions Index climbed nearly three points to 70.2 on higher component readings for new orders at 60.4 and employment at 70.3. The reading for production or sales fell to 76.2.