A monthly index tracking business conditions in Colorado has rebounded to its highest level in nearly a year on continued growth in the energy sector and exports.
The Business Conditions Index jumped more than nine points in May to 62.9. That’s the highest reading since the index stood at 68.4 in June 2010.
The index ranges from 0 to 100. Readings above 50 signal an expanding economy over the next three to six months.
“Healthy energy commodity prices continue to boost growth in the state’s large energy sector, while expanding exports remain an important contributor to Colorado’s durable goods manufacturing growth,” said Ernie Goss, director of the Goss Institute for Economic Research in Denver. Goss calculates the index for Colorado, Utah and Wyoming based on the results of monthly surveys of supply managers in the mountain states region.
In addition to good news, the latest survey results for Colorado also include bad news, Goss said. “Nondurable goods manufacturing firms in the state are experiencing little new growth. However, the construction industry remains the biggest impediment to overall state growth.”
The overall index for Colorado reflects higher component readings for new orders at 81.9, production or sales at 79.5 and employment at 58.4.
The combined Business Conditions Index for the mountain states slipped more than a point in May, but at 57.5 continues to forecast growth for a 19th straight month.
“While higher commodity prices have cooled regional growth a bit, our survey points to a healthy expansion in the months ahead, with exports making a significant contribution to growth,” Goss said. “We are beginning to see higher energy prices cut into economic growth for some firms even as higher energy and commodity prices improve the outlook for businesses linked to the energy sector and agriculture.”
The overall index reflecting slightly lower component readings for new orders at 64 and production or sales at 59.7. The reading for employment rose more than three points to 54.9. “Job growth was especially strong for firms more dependent on international sales and those with ties to agriculture,” Goss said.
The reading for business confidence fell two points to 60, while the reading for wholesale prices retreated to 85.4 after hitting a record-high 90 in April. The reading for inventories also fell, but at 54 reflects an 18th straight month of expansion.
In Utah, the overall Business Conditions Index slipped 1.5 points to 55.4 on mixed component readings. The reading for new orders fell to 58.7, while readings rose for production or sales at 58.8 and employment at 54.2.
In Wyoming, the Business Conditions Index fell five points to 62.5 on component readings of 76.5 for new orders, 54.5 for production or sales and 54.5 for employment.