Utah business index plummets
Economic conditions at their worst since at least 1994, gauge indicates
Utah's business conditions are worse now than at any point since at least 1994, according to a monthly economic gauge released Friday.
Based on a survey of the state's supply managers, the Utah Business Conditions Index fell to a record-low 32.7 in April, down from March's 41.9 and February's 45.5.
The index is compiled by the Goss Institute for Economic Research and uses the same methodology as a national survey done by the Institute for Supply Management. It uses a range of zero to 100, with an index over 50 indicating an expansionary economy over the next three to six months. Goss officials have conducted surveys in Utah, Wyoming and Colorado since 1994.
"The state's business-conditions index points to little relief in the state's economic downturn," Ernie Goss, director of the Goss Institute and director of Creighton University's Economic Forecasting Group, said in releasing the index figures.
Components of Utah's overall index were new orders at 27.3, production at 36.4, delivery lead time at 45.9, inventories at 18.2 and employment at 35.8.
"Since reaching a record high in late 2007, employment in the state has declined by almost 40,000 jobs," Goss said. "Our surveys indicate that job losses and rising unemployment will continue to characterize Utah in the months ahead."
The three-state Mountain States Business Index for April "points to continuing economic weakness and rising unemployment for the region over the next three to six months," the institute said.
The region's index fell to 37.8 from March's 39.2 and February's 44.6, but it was above January's record-low 31.6.
"While the region continues to experience job losses and rising unemployment rates, the economy has likely bottomed out," Goss said. "Thus, I expect the pace of job losses to slow in the months ahead, as the federal stimulus and accommodative economic policy of the Federal Reserve begin to have positive impacts."
Colorado's index fell to 38.0 from March's 41.3 and February's 43.5. Wyoming's moved above growth-neutral for the first time since November.
Nationally, the Institute for Supply Management, a trade group of purchasing executives, said Friday that its manufacturing index rose to 40.1 in April from 36.3 in March. Wall Street economists had expected the index to rise to 38 in April, according to a survey by Thomson Reuters.
As new orders rose, company inventories shrank for a 36th straight month — suggesting that future production will need to ramp up and eventually help stimulate the economy.
"Manufacturing remained in intensive care in April, but the pain has begun to ease," said Joel Naroff, chief economist at Naroff Economic Advisers. "Though the reading is well below the magical 50 level, which points to growth, it is the highest mark since September 2008, which is when the sky fell in."
The index, based on a survey of members group, which is based in Tempe, Ariz., had fallen steadily as the economy deteriorated late last year, hitting a 28-year low in December. The index covers indicators such as new orders, production, employment, inventories, prices, and export and import orders.
The ISM report for April showed that manufacturing inventories contracted for the 36th straight month, though at a slower pace than before. Smaller inventories are an important signpost, because they indicate that companies will eventually need to restock goods and boost production to meet new orders. That would help revive the economy.
The new-orders index reached 47.2, up 6 percentage points from March.
"The decline in the manufacturing sector continues to moderate," said Norbert J. Ore, chairman of ISM's manufacturing business survey committee. "While this is a big step forward, there is still a large gap that must be closed before manufacturing begins to grow once again."
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