|Business Improves, Confidence Lags Behind|
|Special to the Post | 7/9/12|
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|Colorado’s leading economic indicator, based on a monthly survey of supply managers in the state, rose to a healthy level for June. The overall index, termed the Business Conditions Index, for June climbed to 58.6 from May's level of 55.7.
Components of the Business Conditions Index for June were new orders at 56.3, production or sales at 56.9, delivery lead time at 52.1, inventories at 60.9, and employment at 66.9.
“Colorado’s job additions for 2012 are 10,000 greater than for the same period in 2011. Both durable and nondurable goods manufacturers in Colorado are benefiting from healthy expansions in energy income," noted analyst Ernie Goss, director of the Goss Institute for Economic Research. "However, given the direction in exports and the value of the U.S. dollar, I expect second half Colorado job growth to be down from that experienced in the first half of the year.
"Nonetheless, it will continue to be positive and above that of the nation,” said Goss.
“Although businesses that we survey continue to benefit from healthy farm and energy income, recent gains in the value of the U.S. dollar and global economic problems are likely to weaken this growth in the months ahead. The stronger dollar tends to make U.S. goods less competitive abroad and push energy and agriculture commodity prices lower.”
Last month, supply managers were asked the biggest negative hurdle facing their firm in the next year. Approximately 9 percent reported that the implementation of healthcare reform was the number one negative factor ahead for their company. Another 43 percent indicated that the European economic turmoil represented the largest economic headwind for their company while 13 percent and 26 percent, reported that the housing market and slow wage growth, respectively, were the biggest economic obstacles for their company.
The remaining 9 percent think the end of the "Bush" tax cuts at year's end represents the number one threat to their company's 2013 success.
The Goss Institute conducts the monthly survey for Supply Management Institutes in the three states comprising the Mountain States region.
The employment index once again climbed above growth neutral. The hiring gauge advanced to a healthy 63.0 from May's 62.9. “The Mountain States region continues to outperform the U.S. in terms of job growth. While the region accounts for approximately 2.9 percent of the nation’s employment, it has contributed more than 4.2 percent of 2012 U.S. job additions. Based on our survey results, this regional advantage should continue for the near term or 3 to 6 months. Even so, job gains for the rest of 2012 for the Mountain States will be down from that experienced in the first half of 2012 but remain positive,” said Goss.
In the June survey, supply managers were asked if the Obama Administration should initiate another economic stimulus program. Almost three fourths, or 74 percent, said absolutely not. Only 13 percent said yes, with the remaining 13 percent unsure.
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.
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