Mountain States Economies to Grow in Months Ahead:
Higher Inflation in Pipeline

March survey results at a glance:

• Business conditions index climbs above growth neutral for sixth straight month.
• Inflation gauge indicates significant inflation at wholesale level.
• Firms added jobs in the region.
• Export orders strengthened significantly over last two months.

For Immediate Release: April 1, 2010
Denver, CO – For a sixth 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 March dipped to a healthy 56.6 from February’s 58.6. The index is pointing to improving economic conditions for the three-state region composed of Colorado, Utah and Wyoming in the months ahead.
The March employment index slipped to 53.9 from 54.7 in February. “While the region has yet to record overall and significant positive job growth according to government data, surveys over the past several months indicate that the region experienced slight positive job growth for the first quarter of 2010,” Goss Institute for Economic Research Director Dr. Ernie Goss said today. The Goss Institute conducts the monthly survey for Supply Management Institutes in the three states comprising the Mountain States region. Goss also directs Creighton University’s Economic Forecasting Group and is the Jack A. MacAllister Chair in Regional Economics (http://www.ernestgoss.com/aboutus.html).
The region’s manufacturing and value-added services sectors are experiencing very strong business activity. I expect this increase in activity to extend over to the rest of the regional economy in the months ahead. As indicated in earlier reports, I expect the region to record overall job growth for the first quarter of 2010. However, job additions for the first quarter will be muted as firms continue to take a cautious approach to hiring. For the next six months, 21 percent of the firms reported that they planned to add workers, and an equal 21 percent indicated that they expected layoffs. The remaining 58 percent anticipate no change in employment levels for the next six months.
Rebounding prices have accompanied the regional economic improvements. The prices-paid index, which tracks the cost of raw materials and supplies, expanded to 70.7 from February’s 68.5 and January’s 70.9. This is the ninth time in the past ten months that the regional inflation gauge has climbed above growth neutral. “While we have yet to experience rising inflationary pressures at the consumer level, record-low interest rates from the Federal Reserve, combined with the stimulative federal government spending, are creating price bubbles in various commodities and will ultimately contribute to inflationary pressures at the consumer level above the Fed’s goal of 1.75 percent to 2 percent. To combat this trend, I expect the Fed to raise the federal funds rate by 0.25 percent before the end of the second quarter of this year,” said Goss.
Looking ahead six months, economic optimism, captured by the March confidence index, dipped slightly to a still strong 60.3 from February’s 62.8. “Record low interest rates, a stabilizing job market, and recent declines in the nation’s unemployment rate buoyed the economic optimism of supply managers in the Mountain States region,” said Goss.
Trade numbers improved significantly for March as new export orders advanced to 57.3 from 54.0 in February and 47.5 in January. March imports expanded to 52.2 from February’s 51.6 and January’s 47.9. “Despite the recent appreciation in the value of the dollar, making U.S. goods less price competitive abroad, I expect exports to be an important ingredient of the regional economic recovery in the months ahead,” said Goss.
As another measure of economic confidence, supply managers in the three-state region added to inventories of raw materials and supplies for the month. The March inventory index slipped to 56.1 from February’s 58.4. “This is the fourth straight month that we have recorded inventory restocking after more than one year of inventory reductions,” said Goss.
Other components of the March Business Conditions Index were new orders at 58.6, down from 61.7 in February; production or sales at 59.6, down from 62.4; and delivery lead time at 54.7, down from 56.0.
The Institute for Supply Management, formerly the Purchasing Management Association, has been formally surveying its membership since 1931 to gauge business conditions (www.ism.ws). The Goss Institute uses the same methodology as the national survey. The overall index, referred to as the Business Conditions Index, ranges between 0 and 100. An index greater than 50 indicates an expansionary economy over the course of the next three to six months.
The Creighton Economic Forecasting Group has conducted the monthly survey of supply managers in Colorado, Utah, and Wyoming since 1994 to produce leading economic indicators of the Mountain States region. 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).
Colorado: For a sixth straight month, the state’s leading economic indicator rose above 50.0. The March index, based upon a survey of supply managers in the state, slipped to 57.0 from February’s 58.8. Components of the overall index for March were new orders at 58.2, production or sales at 61.2, delivery lead time at 57.2, inventories at 54.3, and employment at 54.2. “When the government releases March employment data, I expect it to show that Colorado added jobs for the first quarter of 2010. Based on our surveys over the past several months, Colorado will continue to add jobs, albeit at a slow pace, for the second quarter of 2010. Even as the state adds jobs, I expect the state’s unemployment rate to remain above seven percent for the remainder of 2010,” said Goss.
Utah: The state’s Business Conditions Index, a leading economic indicator, once again climbed above growth neutral 50.0. Based on the monthly survey of the membership of NAPM-Utah (www.napmutah.org), the overall index inched upward to 55.9 from 55.8 in February. Components of the overall index for March were new orders at 59.5, production or sales at 60.6, delivery lead time at 51.1, inventories at 57.1, and employment at 51.1. “When the government releases March employment data, I expect it to show that Utah’s level of employment was virtually unchanged for the first quarter of 2010. Based on our surveys over the past several months, Utah will add jobs, albeit at a slow pace, for the second quarter of 2010. Even as the state adds jobs, I expect the state’s unemployment rate to remain above 6.5 percent for the remainder of 2010,” said Goss.
Wyoming: The state’s leading economic indicator climbed above growth neutral for a fifth straight month. The Wyoming Business Conditions Index for March slumped to a still healthy 57.5 from 65.0 in February. Supported by NAPM-Western Wyoming (http://www.ism.ws/sites/westwyoming/index.htm), surveys over the past several months indicate that the state’s economy is on the road to recovery. Components of the overall index for March were new orders at 56.9, production or sales at 57.9, delivery lead time at 54.3, inventories at 58.7, and employment at 59.6. “When the government releases March employment data, I expect it to show that Wyoming employment levels remained flat for the first quarter of 2010. Based on our surveys over the past several months, Wyoming will add jobs, albeit at a slow pace, for the second quarter of 2010. Even as the state adds jobs, I expect the state’s unemployment rate to remain above seven percent for the remainder of 2010,” said Goss.

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