From Deseret News archives:

Utah business index slips

But overall conditions still 'healthy,' gauge says

Published: Tuesday, April 3, 2007 1:34 a.m. MDT
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Utah's overall business conditions slipped for a second month in March but nonetheless remained "healthy," according to a gauge produced by Creighton University.

The Utah Business Conditions Index, based on a survey of supply managers and business leaders, fell to 58.5 last month, down from 64.4 in February and 86.8 in January.

The index ranges from zero to 100, with a figure over 50 indicating an expansionary economy over the next three to six months. The Creighton Economic Forecasting Group's survey uses the same methodology as the Institute for Supply Management's national survey to gauge business conditions.

On the national side, manufacturing companies reported Monday that business expanded at a slower-than-expected pace in March even as prices surged for raw materials. The ISM said its manufacturing index registered 50.9 in March, below the February reading of 52.3 and Wall Street's expectation of 51.

Among components in the Utah overall index from Creighton were new orders at 59.4, production at 58.4, delivery lead time at 55.6, inventories at 55.3 and employment at 61.2.

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"Growth in the first quarter for Utah was more than three times that of the U.S.," Ernie Goss, a Creighton economics professor and director of the forecasting group at the Omaha, Neb., university, said in a prepared statement. "Our survey indicates that this brisk growth will continue well into the summer. Accompanying the growth has been significant upward pressures on prices."

The Mountain States region — consisting of Utah, Colorado and Wyoming — had an overall index of 65.3, which the Creighton group called "vigorous." It was unchanged from February and down from January's 83.8.

Colorado's figure was 69.4, up from 54.2 in February but down from 69.8 in January. Wyoming's 61.8 index was down from 75.6 in February and 77 in January.

"The region's rate of growth for the first quarter was approximately three times that of the U.S. I expect this gap to continue well into the summer of 2007," Goss said.

Despite shortages of skilled labor, particularly in Utah and Wyoming, March's employment index expanded to 69.4 from February's 66.7, he said. "I expect job growth to remain brisk in the months ahead, especially for non-urban areas with tighter linkages to energy production," Goss said.

Despite the sluggish growth noted in the national ISM index, prices appeared to be surging for certain commodities, including aluminum, cobalt, copper, corn, corrugated containers, diesel fuel, natural gas and steel, as demand increased around the world. The ISM's price index shot up to 65.5 in March from 59 in February, causing unease among analysts and investors.

"There's very little growth, but prices are rising. It's not a healthy mix," said Nigel Gault, an analyst with Global Insight in Lexington, Mass. Rebounds in oil prices over the past few months are also adding to pricing pressures, he said.

Employment and manufacturers' inventory levels also declined.

The ISM's manufacturing sector index has wavered above and below 50 for several months, an indication of the overall economy's uncertain path. It showed contraction in November, rebounded in December, fell back again in January, only to expand again in February.

The expansion in March marked the second consecutive month of growth for the manufacturing sector, while the overall economy grew for the 65th consecutive month.


E-mail: bwallace@desnews.com

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