High-tech and energy woes get most of blameGrowth in Utah's economy slowed significantly in September, mainly due to weakness in the technology and energy sectors, according to the Mountain States Business Conditions Index, released Thursday.
"Softness in the high-tech and energy sectors has finally caught up with Utah's economy and is slowing growth in the state," said Peter Goss, economics professor at Creighton University in Omaha, Neb., who produces the monthly index. Utah's overall index was 46.7 for the month, down from 63.4 in August.An index number greater than 50 reflects an expanding economy while a number below 42 indicates a contracting economy.
Goss produces a monthly Mountain States Business Conditions Index for Utah, Colorado and Wyoming by surveying purchasing managers in the three states. He uses the same criteria as the National Association of Purchasing Management, which has been polling its members since 1931 to gauge the national economy. That survey is considered a leading economic indicator.
The national purchasing association said Thursday that prices for manufactured goods nationally fell at their fastest rate in nearly 50 years last month, adding to concerns of deflation in the national economy.
The NAPM survey of 400 purchasing managers in all sectors of the economy said its price index dropped from 38.4 percent in August to 34.4 percent in September. Prices have now dropped nationwide for nine straight months.
Other reports have shown prices plunging for information technology products as well as lower prices for cars, appliances, textiles and clothing.
For the three-state mountain region, the September index was 53.4, down from 59.6 in August. As in Utah alone, Goss cited softness in the energy and high-tech areas tied to exports for the downturn. He also noted that some purchasing managers reported that poor rail service is putting a damper on business activity in the region.
"This part of the nation is showing more inflationary pressure than the rest of the United States due to labor shortages in the region," said Goss. "Though employment appears strong, with an overall index of 56.4, it dropped from 68.4 in August. Some areas in the mountain states report continued difficulties in finding and hiring qualified workers."
Utah's employment index for September was 42 while the exports index was at 35.
For the three states, exports dropped slightly to 40 for the month, which Goss said reflects what is going on in much of the nation due to the high value of the dollar overseas and turmoil in Asian markets.
The purchasing agent survey's finding are confirmed by the autumn issue of "Insight," an economic newsletter produced by Zions Bank and its economic consultant, Jeff Thredold.
That report says economic growth has slowed in Utah in recent months, a continuation of a trend going back 18 months. The bank expects the next 12 to 18 months to be more of the same with job creation continuing to be the lowest since the late 1980s.
Utah added 30,300 new jobs during the past 12 months, a growth rate of 3 percent and well below the 5.3 percent average for the five years from 1993 to 1997.
A recent study by Brandow Co. ranked Utah as the sixth best state for attracting new business and fifth for the overall number of jobs that new companies have brought to the area.