U.S. manufacturing activity declined in February to its weakest level in nearly five years, an industry group survey showed Monday, heralding more instability in the job market and frailty in the overall economy.
Utah's Business Conditions Index, compiled by Creighton University and using the same methodology as the national report, fell to 53.9 in February from January's 54.2. The index is based on a survey of supply managers and business leaders. A reading above 50 indicates expansion, and anything below that shows contraction.
Elements of the Utah index include new orders at 55.1, production at 53.2, delivery lead time at 53.8, inventories at 56.4 and employment at 51.6.
"I expect Utah's growth to slow in the months ahead," said Ernie Goss, Creighton economics professor and director of Creighton's Economic Forecasting Group. "Expansions in mining and natural resources will be more than offset by continuing downturns in manufacturing firms tied to domestic sales."
After reporting modest growth for January, the Institute for Supply Management said its February manufacturing index for the nation registered at 48.3 its weakest reading since April 2003, but above Wall Street's even poorer expectations.
The February figure was a bit better than the median forecast of 48.1 of economists polled by Thomson Financial/IFR. But it was slightly worse than December's reading of 48.4.
Creighton's three-state Mountain States Business Conditions Index fell for the first time since November, slipping to 57.6 in February, down from January's 65.5.
"Firms across the three-state region reported solid, but softer, economic gains for February," Goss said. "While there has been fallout from the downturn in housing, it has been largely limited to metropolitan areas of the region. "
Growth in the region's large mining and natural resources sector continues to boost the regional economy, especially for industries with close ties to this sector such as trucking, he said. "There is scant evidence that the downturn in the national economy is spilling over into the Mountain States economy."
Colorado's index nosedived from 86.9 in January to 59.1 in February. Wyoming's index also fell, from 65.0 in January to 61.4 in February.
On the national front, manufacturers have been struggling with the rising cost of raw materials and languid demand in the housing market. Industries reporting declining activity last month included furniture, textiles, machinery and chemical products; those reporting growth included apparel, leather, wood, plastics and rubber, and food and beverage.
It's too soon to determine whether economic reports prove that the nation's economy is headed for, or already in, a recession. Recession is normally defined by two straight quarters of declines in gross domestic output. But recession or not, Monday's manufacturing data supported the argument that the economy is indeed on the wane.
"You can't paint a happy face on this data," said Wachovia Corp. economist Mark Vitner. "The economy may not be in recession, but it's not that far off."