January survey results at a glance:
· Business confidence rises for month.
· Inflation gauge climbs back into inflationary territory.
· Leading economic indicator points to healthy growth for first half of 2011.
· Export orders show healthy upturn.
For Immediate Release: Feb. 1, 2011
Denver, CO – For the sixteenth straight month, the overall index for the Mountain States region, a leading economic indicator for the three-state area of Colorado , Utah and Wyoming , advanced above growth neutral 50.0. According to surveys of supply managers over the past several months, including January’s, the region, driven by higher energy commodity prices and upturns in international sales, will experience improving economic conditions in the months ahead.
Overall Index: The overall index, or Business Conditions Index, for January dipped to a still healthy 56.2 from 57.6 in December. “Even though the leading economic indicator declined slightly, it remained at a level pointing to expanding business conditions for the first half of 2011. January business activity was particularly strong for durable goods manufacturers. This will continue to spark overall economic conditions for the first six months of 2011,” Goss Institute for Economic Research Director Dr. Ernie Goss said today. The Goss Institute conducts the monthly survey for Supply Management Institutes in the three states comprising the Mountain States region. Goss also directs Creighton University ’s Economic Forecasting Group and is the Jack A. MacAllister Chair in Regional Economics (http://www.ernestgoss.com/aboutus.html).
Employment: The January employment index climbed to 57.2 from 56.4 in December. “Businesses in our survey are expanding their pace of hiring. I expect the pace of hiring for the next six months to trend upward, especially for manufacturers tied to energy and the global economy,” said Goss.
Wholesale Prices: The regional price gauge expanded to an inflationary 77.1 from 71.2 in December. The prices-paid index, which tracks the cost of raw materials and supplies, has now moved above growth neutral in nineteen of the past twenty months. “Prices for most raw materials, commodities and supplies are increasing at an unsustainable pace. Over the last year, U.S. commodity prices have risen by 6.6 percent driven by a 12.4 percent upturn in fuel prices, a 9.7 percent gain in metal prices and an 18.0 percent increase in agriculture prices. This increase at the producer level will bolster consumer prices well above the Federal Reserve’s target rate of 2 percent sometime in 2011. I expect long-term interest rates to grow rapidly in the second half of 2011 to compensate investors for rising inflation. The Fed is currently keeping long-term interest rates artificially low with their bond buying program, quantitative easing (QE2),” said Goss.
Business Confidence: Looking ahead six months, economic optimism, captured by the confidence index, advanced to 75.0 from 64.8 in December. “Despite elevated unemployment rates, record low interest rates, a stabilizing housing market and expanding exports are translating into a strong economic outlook,” reported Goss.
Inventories: Supply managers in the three-state region added to inventories of raw materials and supplies for the month at a faster pace with a reading of 54.0, up from December’s index of 50.6. “This is the fourteenth straight month that we have recorded inventory restocking after more than one year of inventory reductions during the economic downturn. As a result of rising economic confidence, firms in the region continue to expand inventories in anticipation of growing sales in 2011,” said Goss.
Trade: New export orders rose briskly for January with a reading of 67.0, up from 61.6 in December. Imports for January also moved higher with an index of 59.1 from December’s 54.2. “Much like the U.S. economy, the Mountain States regional economy is experiencing very healthy growth in exports. The weak U.S. dollar, making U.S. goods more competitively priced abroad, and an improving global economy, are pushing exports higher. This has been and will continue to be an important source of regional growth. Additionally expanding business conditions in the region are stimulating businesses in our survey to increase their international and domestic buying,” stated Goss.
Other Components: Other components of the January Business Conditions Index were new orders at 59.7, down from 63.2 in December; production or sales at 54.6, down from 59.1; and delivery lead time at 55.4, up from 58.7 in December.
The Institute for Supply Management, formerly the Purchasing Management Association, has been formally surveying its membership since 1931 to gauge business conditions (www.ism.ws). The Goss Institute uses the same methodology as the national survey. The overall index, referred to as the Business Conditions Index, ranges between 0 and 100. An index greater than 50 indicates an expansionary economy over the course of the next three to six months. The overall index is a mathematical average of new orders, production or sales, employment, inventories and delivery lead time.
The Creighton Economic Forecasting Group has conducted the monthly survey of supply managers in Colorado , Utah , and Wyoming since 1994 to produce leading economic indicators of the Mountain States region. The Goss Institute assumed operation of the survey in August of 2008, working with NAPM-Utah (www.napmutah.org) and NAPM-Western Wyoming (http://www.ism.ws/sites/westwyoming/index.htm).
Colorado: The state’s leading economic indicator, based on a monthly survey of supply managers in the state, moved lower for January. The January overall index, termed the Business Conditions Index, slipped to a still solid 54.9 from 58.1 in December. Components of the Business Conditions Index for January were new orders at 53.3, production or sales at 64.2, delivery lead time at 55.2, inventories at 46.3, and employment at 54.9. “Manufacturing, both durable and non-durable, linked to international markets is experiencing very healthy growth. Colorado firms involved in energy production are also benefiting from strong global growth and upturns in energy commodity prices,” said Goss.
Utah: The state’s overall index, or Business Conditions Index, a leading economic indicator, once again climbed above growth neutral 50.0. Based on the monthly survey of the membership of NAPM - Utah (www.napmutah.org), the overall index dipped to a still healthy 55.9 from 57.4 in December. Components of the Business Conditions Index for January were new orders at 58.7, production or sales at 56.3, delivery lead time at 58.1, inventories at 55.1, and employment at 51.5. “Both durable and non-durable goods manufacturers in the state experienced healthy business conditions for January. Producers of metal products continue to report healthy economic conditions and improving prospects,” said Goss.
Wyoming: The state’s leading economic indicator from a survey of supply managers in the state climbed above growth neutral for the fifteenth straight month. The index, termed the Business Conditions Index, expanded to 61.1 from 57.2 in December. Supported by NAPM-Western Wyoming (http://www.ism.ws/sites/westwyoming/index.htm), surveys over the past several months point to an expanding state economy for the first half of 2011. Components of the overall index for January were new orders at 66.7, production or sales at 50.0, delivery lead time at 39.9, inventories at 69.0, and employment at 81.4. “Durable and non-durable goods manufacturers in the state, especially those linked to international markets and/or energy production are reporting very healthy economic conditions,” said Goss.
February survey results will be released on March 1.
Prairie Gateway re-branded to Victory Crossing {Commerce City}
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