A monthly index tracking business conditions in Colorado has increased along with job growth and construction activity.
The Business Conditions Index climbed 1.7 points to 56.5, well above the level forecasting an expanding economy over the next three to six months.
“The state is adding jobs at an annual pace exceeding 2 percent, or well above the region and nation,” said Ernie Goss, director of the Goss Institute for Economic Research in Denver. “Growth in manufacturing and mining continues at a slow pace, while businesses tied to construction are experiencing upturns in business activity.”
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 signal expanding conditions.
In Colorado, the overall index reading reflected higher component readings for new orders at 52.2, production or sales at 53.7 and employment at 53.3.
Meanwhile, the Business Conditions Index for the mountain states slipped 1.5 points to 53.6.
“Even though growth will continue for the remainder of 2013, it will be at a slower pace,” Goss said. “Mining firms and companies supporting this sector are experiencing pullbacks in economic activity. On the other hand, construction activity continues to trend higher and add to overall regional growth.”
The overall mountain states reading reflected a lower reading for production or sales at 52.9, while the reading for new orders held steady at 53.5.
The reading for employment jumped nearly five points to 54.1.
“Manufacturers tied to agriculture and energy are growing at a slower pace than this time last year,” Goss said. “On the other hand, companies tied to construction are experiencing healthy growth. Food processing firms are also expanding at a solid pace.”
A component of the index tracking confidence among supply managers in the three states declined almost three points to 49.4. “International political tensions, higher interest rates and global economic weakness cooled economic optimism for August,” Goss said.
A component of the index tracking inventories of raw materials and supplies — a leading indicator of subsequent production and sales — tumbled more than nine points to 49.4. August marked the first time the reading has dipped below growth-neutral 50 in nearly four years.
The reading for prices paid, a measure of wholesale inflation, rose almost seven points to 59.2. “Our survey, as well as national surveys, are indicating that the period of benign inflation may be ending,” Goss said. As a result, the Federal Reserve soon could start reducing a bond purchase program designed to stimulate the economy, he added.
The reading for new export orders from the mountain states region inched down about a point to 50.9, while the reading for imports edged up nearly a point to 49.2. “Economic pullbacks and slowdowns in Asian and Europe, along with increases in the value of the U.S. dollar, are having clear negative impacts on sales abroad,” Goss said. “At the same time, slower regional growth pushed the import reading lower.”
In Utah, the Business Conditions Index fell 2.4 points to 51.9 on lower component readings for new orders at 49.9 and production or sales at 51.3. The reading for employment increased to 50.3.
In Wyoming, the Business Conditions Index slipped 1.4 points to 54.5 on lower component readings for new orders at 57.6 and production or sales at 52.9. The reading for employment increased to 55.6.