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2011
Leading Economic Indicators Mountain Region
September 15, 2011
Mountain States Region
Leading Economic Indicator Dips to Healthy Level:
Business Confidence Tumbles to Recession Levels
August survey results at a glance:
- Leading economic indicator dips to a healthy level.
- Employment gauge is consistent with annualized job growth above a healthy two percent.
- For the remainder of 2011, approximately 14.3 percent expect a decline in business activity, 33.4 percent anticipate an upturn in sales, and the remaining 52.3 percent expect no change in business activity.
- Business confidence slumped below growth neutral.
Overall Index: The overall index, or Business Conditions Index, which ranges between 0 and 100, slipped to 56.8 from 57.4 in July.An index of 50.0 is considered growth neutral.While the growth is likely to slow slightly due to the slowing of the U.S. economy, our survey results indicate that a strong energy sector and a stabilizing housing market are positively influencing the regional economy.This month we asked supply managers what the expected sales growth was for their company for the rest of 2011.Approximately 14.3 percent expect a decline in business activity, 33.4 percent anticipate an upturn in sales, and the remaining 52.3 percent expect no change in business activity for the rest of 2011.
Employment: The August employment index advanced to 57.6 from July's 56.2. Contrary to the nation, the Mountain States region is growing its employment at a solid pace.However, I do expect this pace to slow as the national slowdown begins to reduce regional growth.Readings over the past several months are consistent with annual job growth above a healthy two percent.
Wholesale Prices: The prices-paid index, which tracks the cost of raw materials and supplies, expanded to an inflationary 76.0 from 67.8 in July.Solid economic growth has generated inflationary pressures.Both regionally and nationally, inflationary pressures at the wholesale level remain too high to ignore the likelihood of excessive inflationary pressures at the consumer level.With the current Federal Reserve policy remaining very stimulative, I expect inflation to climb significantly above the Fed's target.
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