Utah business conditions better but still weak, report says

Utah business conditions better but still weak, report says

By Brice Wallace, Deseret News
Published: March 3, 2009

A business-conditions gauge for Utah had an upswing in February — the first monthly rise since September.

The Utah Business Conditions Index, released Monday by the Goss Institute for Economic Research, was 45.5 in February, up from January's record-low 36.5 and December's 38.4.

Ernie Goss, the institute's director and director of Creighton University's Economic Forecasting Group, described Utah's index as "still weak."

The index ranges from zero to 100, with a figure above 50 indicating an expansionary economy over the next three to six months. The Utah index is based on a survey of the state's supply managers.

Components of Utah's overall index were new orders at 58.3, production at 42.2, delivery lead time at 40.8, inventories at 47.4 and employment at 38.7.

"The global recession has had a significant and negative impact on the state's large metal manufacturing industry," Goss said in a prepared statement. "Since the beginning of the national recession, this industry has lost more than 1,000 jobs. I expect this industry to be the state's turn-around industry and provide an early signal of the beginning of an economic expansion."

Utah is part of a three-state region that saw its overall index grow to 44.6 in February from January's record-low 31.6.

"For the fourth straight month, the index dipped below growth-neutral," Goss said. "Until recently, growth in the region's large energy sector had bolstered growth in the region. However, a weakening manufacturing sector, especially for firms heavily dependent on international sales, has pushed the region firmly into recession territory."

Colorado's index was 43.5, up from 30.5 in January and 41.5 in December. Wyoming's was below 50 for the third straight month, the first time that has happened since the surveying began there in 1994. Wyoming's 44.8 was up from 35.3 in January but below 47.5 in December.

As part of its surveying, the institute in February asked the region's supply managers about the recently passed federal stimulus package. Only 3 percent of respondents expect it will be "effective" or "very effective" in pushing the economy into growth territory. About 22 percent expect it to be ineffective. The rest of those surveyed were ambivalent.

The national index, also announced Monday, contracted for the 13th straight month in February, but at a slower pace than expected. The reading suggested to some economists that the decline of the ailing factory sector could be bottoming out, though they expect a recovery is still far in the future.

The Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index actually rose to 35.8 from 35.6 in January. Analysts had expected a drop to 33.8. The Goss Institute uses the same methodology as the national survey.

The national index has fallen steadily since August as the economy has deteriorated, hitting a 28-year low of 32.9 in December.

"Survey respondents appear generally pessimistic about recovery in 2009," said Norbert Ore, chairman of the group's survey committee. "Some express hope that the stimulus package will help their industry."

None of the 18 industries covered by the survey — including wood products, primary metals, electrical equipment, transportation equipment and machinery — reported growth.

Contributing: Associated Press. E-mail: bwallace@desnews.com
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