Regional index points to easing of economy's downward spiral

Regional index points to easing of economy's downward spiral
Forecasts » Surveys say worst may be over, but the pain probably isn't

By Christopher Smart, The Salt Lake Tribune
Updated:06/01/2009 07:16:02 PM MDT

Coming on the heels of other recent surveys with similar results, a regional index of economic conditions in Utah and two neighboring states shows signs the downturn might be bottoming out.

Though continued job losses probably mean Utah's economy will extend its struggles through the end of the year, the Mountain States Business Conditions Index for the state rose from a record low of 32.7 in April to 37.5 in May.

Based on a survey of supply managers in Utah, Colorado and Wyoming, the analysis is provided by Omaha-based Creighton University's Economic Forecasting Group. An index of more than 50 indicates an expansionary economy over the next three to six months.

Other surveys released in the past couple of weeks, including Zions Bank's quarterly forecast of business leaders and a check of small businesses, show optimism about companies' futures in Utah is on the upswing.

In the latest survey, leading economic indicators remained below growth neutral in the three states, pointing to a continued recession for the region based on inventories, new orders, production, delivery lead time, inflation and employment. Though some categories showed improvement month-over-month, job losses, particularly in manufacturing, pulled down the overall index.

The three-state region lost an estimated 75,000 jobs during the first five months of 2009, a pace that exceeded the national average by two percentage points. For Utah, job losses were at an annualized rate of more than 7 percent, the survey said.

"Business activity is particularly frail for durable goods manufacturers in Utah, with the rate of job losses significantly above that of the nation and the region," said Ernie Goss, who directs the forecasting group.

The good news: Jobs losses are expected to slow, which combined with expectations of little or no inflation, caused the survey's Business Confidence Index for the region that looks ahead to the next six months to rise to the highest level in more than a year, to 66 from 58.8.

"Business conditions show signs of stabilizing," Goss said. "While supply managers report current weak economic conditions, they expect very low interest rates and the federal stimulus to push the economy into positive growth territory by the end of the year."

The three-state Business Conditions Index rose from 37.8 in April to 38.9 in May, with Colorado posting a 44.0 and Wyoming recording a 41.5.

New orders and production were up slightly, but the global recession continued to restrain exports and imports, Goss said.

csmart@sltrib.com