Utah business index rises a bit

A monthly survey points to expanding economic conditions in Utah during the fourth quarter.

The Utah Business Conditions Index, compiled by the Goss Institute for Economic Research, crept to 54.2 in September from a "weak" August figure of 52.8.

The index, released Wednesday, uses a range between zero and 100, with a figure above 50 indicating an expansionary economy over the next three to six months. It uses the same methodology as a national survey conducted by the Institute for Supply Management. Utah's involves a survey of supply managers.

The state's index was far ahead of the nationwide figure. The ISM on Wednesday released a September reading of 43.5, the lowest level since October 2001. The reading dropped from 49.9 in August, the largest one-month decline since January 1984, when it fell to 60.5 from 69.9.

"The headline ISM has plunged into recession territory," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Wall Street economists had predicted a much stronger reading of 49.5, according to the consensus estimate of those surveyed by Thomson/IFR. The index has been hovering on what economists call "the boom-bust" line for most of the year.

Utah's 54.2 in September compares with a 63.8 figure a year earlier.

"Despite somewhat negative current government data for the state, the leading economic indicator from our monthly survey of supply managers in the state points to expanding economic conditions in the state for the final quarter of 2008," the institute's chief executive officer, Ernie Goss, said in a prepared statement. Goss previously conducted the survey for Creighton University.

Components of Utah's overall index for September were new orders at 54.9, production at 53.5, delivery lead time at 54.6, inventories at 52.3 and employment at 55.6.

"Supply managers in transportation equipment and parts manufacturing and linked to this industry reported pullbacks in economic activity," Goss said. "Firms in the state's telecommunications sector have likewise detailed slower economic growth compared to earlier in the year. On the other hand, computer and electronic component manufacturers reported healthy economic conditions for the month. Despite healthy readings for most components of the survey, I expect Utah's jobless rate to increase by another 0.5 percent by the end of the year."

Utah is part of a three-state Mountain States Business Conditions Index, which slipped slightly 56.3 in September from August's 56.4. Colorado's index was a "respectable" 58.5, Goss said, while Wyoming's was 75.2.