Mountain States Index: Region poised for growth

For the 17th consecutive month, the Business Conditions Index for the Mountain States region – Colorado, Utah and Wyoming – has been above 50.0.

That score is considered growth-neutral, but an index greater than 50 indicates an economy is likely to expand during the next three to six months.

In February, it rose to 59.5 from 56.2 in the prior month.

Last month, Colorado’s index moved up to 57.1 from the prior month’s 54.9.

In the state, the components of the index were: new orders at 55.4, production or sales at 55.8, delivery lead time at 61.8, inventories at 55.6, and employment at 57.0, according to The Goss Institute, which conducts a monthly survey for Supply Management Institutes and also directs Creighton University’s Economic Forecasting Group.

Although Colorado’s manufacturing’s sector is still off more than 24,000 jobs since the beginning of the recession, the institute’s Economic Research Director, Dr. Ernie Goss, expects the positive trend in both manufacturing and overall job growth to continue – albeit at a muted pace for the first half of the year.

For companies in the Mountain States region with ties to the energy or international markets, a rapidly growing energy sector and soaring trade are pushing growth higher. In the three-state region, trade is expected to improve and the energy sector is likely to expand, according to supply managers surveyed over the past several months.

During the next six months, supply managers expect wholesale prices to increase by 3.7 percent.

The index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time. Export orders continue to be an important economic driver of these indices.

The Federal Reserve’s record-low interest rates are providing a significant boost to the regional economy, Goss said.

Over the past year, the Fed’s policy has contributed to a 7.5-percent uptick in energy prices paid by consumers, a 6.5-percent gain in energy prices paid by businesses, and an 18-percent increase in farm products, according to the Goss Institute.

For more information, visit The Goss Institute’s website.