Welcome to our December report covering November survey
results. According to Supply Managers this economic recovery is very
fragile and there is the possibility of a return to recessionary conditions.
Follow my daily comments at: www.twitter.com/erniegoss

WHAT’S AHEAD FOR JOBS & STOCKS?
Many economists and policy pundits tell us that we should expect
job gains no earlier than the second half of 2010. Other pessimists
assert that stock prices are too high for this weak economy. Lies,
damn lies or statistics? Since 1950, the U.S. economy has suffered
10 recessions with a median length of 10 months. On average,
the nation did not begin adding jobs until 3 months after the end
of the downturns. Additionally, the stock market began rising
approximately 4 months before the end of the recessions, on
average. Thus if history is a guide, and given that the recession
ended in the third quarter of 2009, the economy will continue to
experience stock market gains and the nation will begin adding
jobs in the fi rst quarter of 2010. Unfortunately, the lack of clarity
from policy makers is undermining the willingness of businesses
to hire new workers and has the potential to delay new hiring and
puncture stock market gains. Despite economic policy ambiguity,
I expect job gains to begin in the fi rst quarter of 2010 and the
stock market to continue to advance, albeit at a more modest pace.
However, clear, decisive, and easily understood economic policy
from Washington would heighten the economic gains. Ernie Goss.

LAST MONTH’S SURVEY RESULTS
SURVEY RESULTS AT A GLANCE

• Business conditions index climbs to healthy level.
• Still no jobs added for the month.
• Over 44 percent of supply managers expect no pay raise
  for 2010, with almost 50 percent anticipating more
  layoffs in the months ahead.

For a second straight month, the overall index for the
Mountain States region, a leading economic indicator for the three state
area, moved above growth neutral 50.0. The overall index,
or Business Conditions Index, for November climbed to 55.4 from
October’s 51.6. The index is pointing to improving economic
conditions for the three-state region composed of Colorado, Utah
and Wyoming in the months ahead. The November employment
index increased to a still weak 49.9 from 46.1 in October. The
global economic recession has resulted in the loss of almost 27,000
manufacturing jobs, for a 9.7 percent reduction for the region. Our
surveys over the past several months indicate that the pace of
these job losses will diminish signifi cantly in the months ahead. I
expect job losses in the region to cease in the fi rst quarter of 2010.
This month, we asked supply managers about layoffs for their
company. Over 44 percent anticipate that layoffs lie ahead for their
company. As a result of the weak labor market, only 56 percent
of the supply managers expect to receive a pay increase in 2010.
While new orders and sales have been growing and are likely to
continue to expand, that growth is likely to be volatile by historical
standards with marginal improvements in the region’s job market.

MOUNTAIN STATES

COLORADO
For a second straight month, the state’s leading economic indicator
rose above 50.0. The November index, based upon a survey
of supply managers in the state, climbed to 70.3 from 65.5 in
October. Components of the overall index for November were
new orders at 68.9, production or sales at 65.7, delivery lead time
at 65.4, inventories at 73.7, and employment at 77.7. Over the past
year, Colorado has lost 10.4 percent of its manufacturing jobs, or
almost 15,000 of its manufacturing base. A weaker U.S. dollar,
making Colorado goods cheaper abroad, and a rebounding global
economy will underpin the state’s economy in the months ahead.
Exports will be especially important for the state’s computer and
electronic component manufacturing sector. I expect the state
to add jobs, albeit at a snail’s pace, in the fi rst quarter of 2010.

UTAH
The state’s Business Conditions Index, a leading economic
indicator, strengthened for November. Based on the monthly
survey of the membership of NAPM-Utah (www.napmutah.org),
the overall index rose to 55.0 from October’s 50.9. Components of
the overall index for November were new orders at 66.4, production
or sales at 59.6, delivery lead time at 48.8, inventories at 52.0, and
employment at 48.0. Over the past year, Utah has lost 9.5 percent
of its manufacturing employment, or almost 12,000 jobs. A weaker
U.S. dollar and an expanding global economy will assist the Utah
economy in the months ahead. Since the beginning of 2009, the
U.S. dollar has declined by more than 12 percent against Utah’s
most important trading partner’s currency, the British pound.
This will assist the state economy over the next 3 to 6 months.

WYOMING
After falling below growth neutral for eleven consecutive months,
the state’s leading economic indicator climbed above 50.0 for
November. The Wyoming Business Conditions Index for November
advanced to 53.7 from October’s 47.5. Supported by NAPMWestern
Wyoming (http://www.ism.ws/sites/westwyoming/index.
htm), surveys over the past several months indicate that the state’s
economic negatives are getting less negative. Components of the
overall index for November were new orders at 50.0, production
or sales at 53.7, delivery lead time at 67.2, inventories at 53.0,
and employment at 45.0. Over the past year, Wyoming has lost
more than 20 percent of its mining employment, or 6,000 jobs,
due to the global recession and a signifi cant improvement in
productivity. Wyoming producers have been able to obtain more
and more output from fewer and fewer workers. I expect this
trend to be reversed in early 2010 as the state halts job losses.

THE BULLISH NEWS

• The unemployment rate edged down to 10.0%in November,
  and nonfarm payroll em-ployment was down by 11,000
  jobs. In November, employment fell in construction,
  manufacturing, and information, while temporary
  help services and health care added jobs. This was an
  unexpectedly good report.
• The US manufacturing sector expanded for a fourth month
  running in November but at a slower pace than expected,
  a private survey showed Tuesday. The Institute for Supply
  Management said its manufacturing index fell to 53.6
  percent from 55.7 percent in October.