An index tracking business conditions in Colorado has rebounded to its highest level in six months, although more jobs still are needed to regain those lost during the recession.
The Business Conditions Index rose nearly three points in November to 56.2. Gains in each of the last two months have pushed the index to its highest level since hitting 62.9 in May.
“Since employment bottomed out in January 2010, Colorado has added more than 44,000 jobs. However, even with this gain, the state needs to add another 96,000 jobs to return to its prerecession level,” said Ernie Goss, director of the Goss Institute for Economic Research in Denver.
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.
The overall reading for Colorado reflected higher component readings for production or sales at 62.3, new orders at 56.7 and employment at 56.2.
“Nondurable goods producers reported growth, while durable goods manufacturers detailed pullbacks for the month,” Goss said. “Both manufacturers and nonmanufacturers in the state continue to depend more heavily on expanding the average length of the work week rather than increasing employment.”
The combined Business Conditions Index for the mountain states fell a half point to 56.8 in November, but remained above growth-neutral 50 for a 25th consecutive month.
“As in past months, firms closely linked to energy or agriculture and those dependent on exports continue to report sold growth,” Goss said.
“The mountain states regional economy, unlike that of the U.S., shows little evidence of an economic slowdown.”
The overall index reflected a lower component reading for new orders at 56.2. But readings were up for production or sales at 58.5 and employment at 57.4.
Goss said 35 percent of supply managers responding to the surveys upon which the November index was based expect to add workers during the next six months, while 13 percent anticipate layoffs. Most managers —
52 percent — believe staffing levels will hold steady. “Those expectations are somewhat more optimistic than September 2011, when 28 percent expected layoffs in the next six moths,” Goss said.
A component of the index measuring business confidence edged up a little more than a point to 53.4. “Supply managers in our survey remain pessimistic about economic prospects for the first half of 2012,” Goss said. “Economic uncertainty in Europe and a frail U.S. housing sector were identified as factors weighing on the economic outlook.”
Supply managers reported adding to inventories of raw materials and supplies in November, although the reading for inventories fell more than three points to 55.6. “This is the 24th straight month that we have recorded inventory growth, and it remains a growth factor,” Goss said.
The prices-paid component of the index, a measure of wholesale inflation, fell more than four points to 66. Nonetheless, supply managers responding to the November survey said they expect the prices of products they buy to rise 4 percent over the next six months.
The reading for regional export orders advanced more than a point to 60.6, while the reading for imports rose more than three points to 58.5.
In Utah, the Business Condition Index slipped four-tenths to 56.4 on component readings of 54.1 for new orders, 61.2 for production or sales and 55 for employment.
In Wyoming, the Business Conditions Index fell a half point to 60.4 on component readings of 63 for new orders, 47.6 for production or sales and 57.6 for employment.