Mountain States' Economy: A Mixed Outlook
Susan Stiles | 3/1/13

For the 40th straight month, the overall index for the Mountain States region, a leading economic indicator for the three-state area of Colorado, Utah and Wyoming, advanced above growth neutral 50.0. The February index from the survey of supply managers continues to exceed the national index... and the gap is growing.

The Business Conditions Index, which ranges between 0 and 100, climbed to 54.9 from 54.8 in January. An index of 50.0 is considered growth neutral. The overall index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time.

This is the same methodology used by the national Institute for Supply Management.

“Firms with ties to agriculture and energy continue to expand at a solid pace. Additionally, companies dependent on international sales experienced solid growth for the month,” Goss Institute for Economic Research Director Dr. Ernie Goss said today.

Closer to home, Colorado’s leading economic indicator, based on a monthly survey of supply managers in the state, moved above growth neutral for February. The overall index, termed the Business Conditions Index, climbed to 58.9 from January’s 54.4. Components of the Business Conditions Index for February were new orders at 60.0, production or sales at 49.6, delivery lead time at 68.4, inventories at 56.3, and employment at 58.9.

“The state’s housing sector is now stimulating overall growth in the state. Additionally, both durable and non-durable manufacturing firms experienced healthy growth for the month,” said Goss.

The Goss Institute conducts the monthly survey for Supply Management Institutes in the three states comprising the Mountain States region. Goss also directs Creighton University’s Economic Forecasting Group and is the Jack A. MacAllister Chair in Regional Economics.

Looking ahead six months, economic optimism, as captured by the business confidence index, slumped to 49.8 from 52.1 in January. “This month we asked supply managers how the upcoming sequestration would affect their company’s sales. Approximately 37.5 percent expect the cut in federal spending to result in a reduction in unit sales for their company. It is clear that this had a negative impact on supply manager’s economic outlook this month,” said Goss.

The employment index rose above growth neutral for the month. The hiring gauge increased to 54.2 from 53.6 in January.

“As housing has rebounded in the region, so has employment tied to this important industry. Additionally firms tied to agriculture and energy are adding jobs at a healthy pace,” said Goss.

The prices-paid index, which tracks the cost of raw materials and supplies, rose to 71.8 from 69.8 in January.

“The Federal Reserve Open Market Committee, which sets U.S. interest rate policy remains committed to their current aggressive ‘cheap’ money policy. While it has not sparked any significant inflationary pressures for U.S. consumers, this policy is boosting our wholesale inflation gauge and is pushing U.S. asset prices up at a pace that is causing disruptions in certain sectors of the economy such as energy and agriculture,” said Goss.


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