With cooler weather has come a cooler economy in Utah, according to a business-conditions gauge produced by Creighton University in Nebraska.
The Utah Business Conditions Index, based on a survey of supply managers and business leaders, slipped to 63.8 in September from August's 71.8.
The index has a range from zero to 100. A figure higher than 50 indicates an expansionary economy over the next three to six months. It uses the same methodology as the Institute for Supply Management's membership survey.
Components of the overall Utah index for September were new orders at 75.0, production at 50.0, delivery lead time at 74.3, inventories at 72.3 and employment at 52.3.
"Durable and nondurable manufacturers in Utah reported strong activity for the month," Ernie Goss, director of Creighton's Economic Forecasting Group and an economics professor, said in a prepared statement. "Economic growth has meant strong business growth for the state's trucking industry."
The September figure is in contrast to January's 86.8 the highest index for 2007 and down from 73.6 in July and 71.8 in August.
Meanwhile, the Institute for Supply Management said Monday that its manufacturing index for the country registered 52.0 in September, down from 52.9 in August. It was the lowest reading since the gauge was at 50.9 last March. Analysts had expected a reading of at least 52.5.
Creighton's Mountain States region index was 64.8 in September, down from 77.7 in August and 71.4 in July. It includes Utah, Colorado and Wyoming.
"While the national economy continues to weaken, the Mountain States region is growing at a brisk pace. Results from our survey point to robust growth in the months ahead," Goss said.
He noted that the "economic optimism" component fell to a still-high 60.0 from 67.9 in August and 78.6 in July.
"The August credit crisis and the downturn in the housing sector pushed the confidence index down for the month. It is clear national issues are having some effect on the outlook of supply managers even as the region experiences vigorous growth," he said.
As for job growth, he is predicting an annualized increase for the fourth quarter to top 2 percent in the region while the national figure would be less than 1 percent.
Colorado's overall index was 66.7 in September, down from 80.7 in August. Wyoming's fell to 64.0 from August's 76.2.
The national figure of 52.0 might suggest there's room for the Federal Reserve to consider another rate cut later this month. Concerned about turbulence in credit markets and a plummeting housing market, the Federal Reserve on Sept. 18 cut key interest rates for the first time in four years, starting with an aggressive half-point move.
Investors have since been monitoring economic indicators such as the ISM's manufacturing report for clues whether the Fed will cut rates further when it meets Oct. 30-31.
Thomas J. Duesterberg, president and chief executive officer of the Manufacturers Alliance/MAPI, which is based in Arlington, Va., said that the positives in the manufacturing sector so far outweigh the negatives.
"Within manufacturing, the positives are aerospace, exports of things like electrical equipment and machinery, chemicals in general and for export," he said. "On the negative side, autos are sluggish domestically, construction materials for the residential market are pretty weak, things like appliances and furniture are somewhat weak."
Still, he expects that the Fed will cut rates an additional quarter of a point later this month, if only to prevent weakness in housing from damaging the broader economy.
"I think what they're thinking these days is that the U.S. economy is fragile ... and that it wouldn't take much to throw us into recession," he said.
Gary R. Thayer, chief economist with A.G. Edwards & Sons Inc. in St. Louis, also predicts that the Fed will lower rates further."I think the Fed is trying to be pre-emptive here and prevent the problems in housing from spreading," he said, adding, "I still think they have more work to do."
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