Six months of growth predicted for economy

Filed under: Daily News |

By Marija B. Vader

A leading economic indicator points to continued growth for the next three to six months, according to the Goss Institute for Economic Research.

Furthermore, most businesses surveyed reported the federal spending sequestration has had no impact on their businesses.

Similar to recent past surveys, the overall index for the Mountain States region, a leading economic indicator for the Colorado, Utah and, Wyoming, advanced to a healthy reading. The May index from the survey of supply managers, as in past months, continues to exceed the national index (www.ism.ws) and point to regional growth significantly exceeding that of the nation.

The overall index, or Business Conditions Index, which ranges between 0 and 100, climbed to 61.0 from 58.3 in April. An index of 50 is considered growth neutral. The overall index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time. This is the same methodology used by the national Institute for Supply Management.

“Durable and non-durable goods manufacturers in the region, particularly those linked to the region’s rapidly expanding construction industry, pushed the overall index higher,” said Dr. Ernie Goss, director of the Institute.

The Goss Institute conducts the monthly survey for Supply Management Institutes in the three states comprising the Mountain States region.

Employment: The employment index bounced well above growth neutral for the month. The hiring gauge climbed to 57.1 from April’s 56.2.

Wholesale Prices: The prices-paid index, which tracks the cost of raw materials and supplies, sank to 59.5 from 65.7 in April.

Business Confidence: Looking ahead six months, economic optimism, as captured by the business confidence index, expanded to 61.0 from April’s 58.2.

Approximately two-thirds, or 68.4 percent, of supply managers in May indicated that the sequestration has had no impact on their company to date. Almost one-third, or 31.6 percent, reported only modest impacts, said Goss.

Inventories: Supply managers in the region added to inventories of raw materials and supplies for the month. The index rose to 65.6 from 60.6 in March.

Trade: The new export order reading for the region rose to 57.3 from April’s 52.1. The import reading for the month dipped to 56.2 from 57.9 in April.

Colorado: The state’s leading economic indicator, based on a monthly survey of supply managers in the state, moved well above growth neutral for May.

The overall index, climbed to a strong 62.8 from 58.2 in April. Components of the Business Conditions Index for May were new orders at 59.1, production or sales at 52.8, delivery lead time at 74.5, inventories at 72.7, and employment at 55.0.

“Businesses tied to the state’s rapidly advancing construction industry continue to experience very healthy business conditions,” said Goss.

June results will be released July 1.

The Goss Institute assumed operation of the survey in August of 2008, working with NAPM-Utah (www.napmutah.org) and NAPM-Western Wyoming (http://www.ism.ws/sites/westwyoming/index.htm).

For historical data and forecasts, visit: www.ernestgoss.com, www.outlook-economic.com, or www.twitter.com/erniegoss.