Construction in Colorado helping business conditions, but jobs still lag

Construction and energy in Colorado helped push up the overall business conditions for the Mountain States region for the 34th straight month.

The overall index, or Business Conditions Index, which ranges between 0 and 100, advanced to a healthy 59 from 56.1 in July, according to the August Mountain States economic report released today.

An index of 50 is considered growth neutral. The overall index for Colorado, Utah and Wyoming considers new orders, production or sales, employment, inventories and delivery lead time.

“Construction in Colorado, energy in Colorado and Utah and manufacturing in all three states pushed readings higher for August,” said Ernie Goss, director of the Goss Institute for Economic Research. “I expect the national numbers that come out later this morning to be considerably weaker than our regional indices.”

The Goss Institute conducts the monthly survey for Supply Management Institutes in the Mountain States region. Goss also directs Creighton University’s Economic Forecasting Group and is the Jack A. MacAllister Chair in Regional Economics.

Colorado’s leading economic indicator, based on a monthly survey of supply managers in the state, bounced higher for August. The overall index, termed the Business Conditions Index, for August rose sharply to 59 from July’s 49.6.

Components of the Business Conditions Index for August were new orders at 58.6, production or sales at 59.3, delivery lead time at 58.3, inventories at 56.1, and employment at 62.5.

“Construction employment has increased by 5.2 percent over the past year,” Goss said. “This has been a significant stimulant to the overall state economy. Both durable and non-durable goods producers are experiencing healthy growth in sales, new orders and employment.”

Overall, in the Mountain States region, the employment index again climbed above growth neutral. The hiring gauge expanded slightly to 59.2 from July’s strong 59.

“While the region has been adding jobs at a healthy pace, the current level of employment for the region is down by almost 94,000 jobs, or 2.4 percent, from pre-recession levels,” Goss said. “Based on 2012 experience, it will take another two years before the region recaptures all of the jobs lost as a result of the recession.”

Looking ahead six months, economic optimism declined to 46.7 from July’s 47.9, the report said.

“Supply managers, much like the entire business sector, remain very pessimistic regarding future economic conditions,” Goss said. “The drought, the fiscal cliff, the elections and European economic turmoil are all weighing on economic confidence.”