Supply managers optimistic about 2013 for job and economic growth

The mountain states ended the year by maintaining their position above neutral growth in a series of economic indicators, according to the Goss Institute of Economic Research monthly economic report.

And, looking ahead six months, the economic optimism of supply managers is climbing.

“An improving national economy and upturns in residential housing pushed business confidence higher,” said Dr. Ernie Goss, the institute’s director.

For the 38th straight month, the overall index for the mountain states region, an economic indicator for Colorado, Utah and Wyoming, advanced above growth neutral 50.0. The December index continues to exceed the national index, which crawled only slightly above growth neutral for December.

In the three-state region, the overall index, or Business Conditions Index, which ranges between 0 and 100, fell to 54.4 from 55.9 in November.  The number is still solid, said economists from the institute. An index of 50.0 is considered growth neutral.  The overall index looks at new orders, production or sales, employment, inventories and delivery lead time.

“The region’s manufacturing and value-added services industries, such as systems development companies tied to health care, continue to expand,” Goss said. “Based on our survey results over the past several months, I expect both overall job and economic growth to continue well into 2013.”

In Colorado, new orders, production and employment — the state’s leading economic indicators — moved above growth neutral for December. The numbers are based on based a monthly survey of supply managers in the state.

The overall Business Conditions Index in Colorado declined to 53.8 for December from November’s 54.9.  New orders were at 49.9, production or sales was at 50.7, delivery lead time was at 50.0, inventories was at 64.2 and employment was at 50.6.

“The growth of the manufacturing sector, especially for  metal producing firms, in the state continues at a healthy pace even as firms tied to the state’s energy sector experienced slower business growth for the month,” Goss said. “Importantly, the state’s construction industry is expanding at a solid pace.”

Employment in the mountain states fell below growth neutral for the month.   The hiring gauge slumped to 48.3 from November’s 52.1 and October’s healthier 57.6. But business confidence, as captured by the business confidence index, climbed to 57.7 from November’s 48.9.

“Durable and non-durable goods manufacturers pulled back on hiring for the month,” Goss said. “Moreover, energy firms and firms linked to energy have slowed their pace of hiring,” Goss said.

Supply managers in the three-state region added to inventories of raw materials and supplies for the month.  The index advanced to 64.2 from November’s 62.4. And that is a good sign, Goss said.

“Healthy inventory growth normally signals that supply managers expect production expansions in the months ahead and is consistent with economic growth,” he said.