Manufacturing sector expands

National and local reports on the manufacturing sector of the economy showed vigorous growth for April, but that acceleration meant inflationary pressures also remained brisk.

The Utah Business Conditions Index, based on a survey of supply managers and business leaders, jumped to 67.7 last month, compared to 58.5 in March and 64.4 in February.

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.

The ISM, based in Tempe, Ariz., said Tuesday that its national manufacturing index registered 54.7 in April, above the March reading of 50.9 and Wall Street's expectation of 51. It was the highest reading in 11 months, when it also registered 54.7.

A sharp spike in the national prices paid index fueled ongoing concerns over inflation and interest rates. The index surged to 73 in April, compared to 65.5 the previous month. Prices rose for commodities including gasoline, aluminum, corn, diesel fuel and steel. No commodities prices fell, the report said.

The prices paid index reached 78.5 in July of last year but had

fallen to 47.5 by December.

"So it's quite a sharp change," said Nigel Gault, economist with Global Insight.

For Utah, the Creighton report said the April 2007 prices paid index was 83.3, compared to 66.7 in April 2006.

"The Utah economy added over 21,000 jobs in the first quarter of this year as the pace of job growth was approximately four times that of the U.S.," said Ernie Goss, a Creighton economics professor and director of the forecasting group at the Omaha, Neb., university. "Based on our survey results over the past several months, I expect Utah to increase its employment level by 22,000 in the second quarter of this year as the unemployment rate levels off at its current very low rate.

"Our survey is detecting little negative fallout from the downturn in the national housing market and subprime delinquencies in Utah. Accompanying the growth has been significant upward pressures on prices."

Goss said in the report that the overall Business Conditions Index for the three Mountain States of Colorado, Utah and Wyoming rose to 75.3 in April from 65.3 in March. The Colorado index rocketed to 80.4 from March's 69.4, and Wyoming's index jumped to 66.6 from 61.8 in March.