A monthly economic index tracking business conditions in Colorado has slumped to its lowest level in a year as payrolls continue to decline.
The Business Conditions Index has forecast expanding conditions in each of the last 12 months. But after three months of declines, the index now stands at 50.6, barely above growth-neutral 50 and at its lowest level since reading 48.7 in September 2009.
Ernie Goss, director of the goss Institute for Economic Research in Denver, calculates the index for the mountain states of Colorado, Utah and Wyoming based on the results of monthly surveys of supply managers in the three states. While Goss said he expects growth in the region, it will come slower in Colorado than the other two states. Job growth will remain particularly slow.
“During the official national recession, Colorado lost almost 114,000 jobs. Since the recession officially ended in June 2009, the state has lost an additional 42,000. In terms of jobs, I do not expect the state to be back to pre-recession levels until the end of 2012,” Goss said.
For September, the Business Conditions in Colorado reflects lower component readings for new orders at 49.3, production or sales at 48.7 and employment at 51.1.
The Business Conditions Index for the mountain states fell seven-tenths to 54, also the lowest level in a year. The latest reading reflects lower component readings for new orders at 51.6 and production or sales at 52.8.
The reading for employment rose nearly three points to 60.2. Goss said 28.7 percent of firms reported increased staffing levels, while 8.4 percent reported cuts. “Over the course of the official national recession, the region lost more than 197,000 jobs. Since the recession officially ended in June 2009, the region has lost an additional 32,500 jobs. In terms of jobs, I do not expect the region to be back to pre-recession levels until the end of 2012.”
Still, supply managers hold out some optimism for improving conditions over the next six months, driving up a confidence index 4.5 points to 59.8. “I was surprised by the relatively strong confidence numbers given the backdrop of negative reports for the national economy,” Goss said.
Supply managers also were asked about their outlook for the upcoming holiday shopping season compared to last year. While 26.7 percent of managers said they expect holiday sales to increase more than 5 percent, 10 percent of managers anticipate a decline in sales of more than 5 percent. At 33.3 percent, most managers expect sales to increase 1 percent to 4 percent, while
20 percent believe sales will drop 1 percent to 4 percent.
Supply managers reported adding to inventories of raw materials and supplies for a tenth consecutive month, but at a slower pace. The September reading for inventories fell more than four points to 51.
The reading for prices paid, a measure of inflation at the wholesale level, advanced 1.6 points to 66.6. The reading has remained above growth-neutral 50 for 15 of the past 16 months. “Based on our survey results, as well as other surveys of supply managers, I still think fears of deflation are way overblown,” Goss said. “Once the economy gets fully back on track, inflation and price bubbles will be the problem, not deflation.”
Trade numbers improved in September with higher readings for new export orders at 52.1 and imports at 55.1. “Recent weakness in the dollar, making U.S. goods more competitive abroad, should support improvements in exports in the months ahead,” Goss said.
In Utah, the Business Conditions Index fell a half point to 54.3 on lower component readings for new orders at 53.6 and production or sales at 56.5. The reading for employment rose nearly four points to 57.1.
n In Wyoming, the Business Conditions Index retreated more than three points to 54.3, although readings were higher for production and sales at 49.6 and employment at 69.1. The reading for new orders held steady at 49.9.