Utah economy heads for slowdown in '08

"Still weak" is how a monthly report projects Utah's economy for the upcoming months.

The Business Conditions Index for Utah, compiled by Creighton University and released Wednesday, was 51.2 in December, up from growth-neutral 50.0 in November but off from October's figure of 60.6.

Based on a survey of supply managers and business leaders, the index ranges from zero to 100. A figure higher than 50 indicates an expansionary economy over the next three to six months. The Utah and three-state Mountain States Business Conditions Index both use the same methodology as a national survey used by the Institute for Supply Management.

The national index registered 47.7 in December, ending a streak of 10 consecutive months of growth and sinking to its lowest point in almost five years, according to the ISM. The decline suggests that the overall economy may be weakening faster than some economists had predicted.

November's index in Utah was the lowest figure since April 2004. In December 2006, the figure was 53.6 but it jumped to 86.8 a month later.

Utah components of the overall December 2007 index were new orders at 47.9, production at 62.5, delivery lead time at 50.1, inventories at 37.5 and employment at 50.0.

"For more than four years, Utah's economy has been expanding at a breakneck pace," said Ernie Goss, a Creighton University economics professor who leads the university group that compiled the report. "Based on results from our survey over the past several months, I expect the expansion to slow significantly in the first half of 2008."

The Mountain States index grew in December for the first time since August, to a "healthy" 61.2 from November's 56.6.

"Since August 2003, the region has been growing at more than twice the rate of the national economy," Goss said Wednesday. "During this same period, the price of oil has more than tripled. Thus, much of the region's superior growth can be traced to the large mining and natural-resources industry. With oil prices unlikely to retreat in the months ahead, I expect the Mountain States economy to expand at a solid but somewhat slower pace for the first quarter of 2008."

Colorado's index for December was 70.0, up from November's 61.9. Wyoming's figure was 63.3, up from 62.5 in November.

The national figures are closely watched because a slowdown in factory production can translate to job cuts, which in turn reduces consumer spending — a major component of the economy.

The ISM, a private research group based in Tempe, Ariz., said the national manufacturing index was down 3.1 percentage points from the 50.8 recorded in November.