Mountain States Overall Index Hovers at Growth Neutral:

Professor Ernie Goss from Creighton University is our special guest at 7:07AM MST today on The Morning Zone and will give details on his October Mountain States Economic Report.

One in Six Businesses Report Federal Shutdown Impacts

October survey results at a glance:

· Regional leading indicator moves slightly above growth neutral.

· Employment index slumps below growth neutral.

· Approximately one of six businesses, or 16.7 percent, indicated that the shutdown had negatively affected their firm.

· Impact of federal spending sequestration growing.

For Immediate Release: November 1, 2013

Denver, CO –The overall index for the Mountain States region for October, a leading economic indicator for the three-state area of Colorado, Utah and Wyoming, declined to a level pointing to much slower growth for the next 3 to 6 months. However, the partial federal shutdown was a contributor to the weaker number for October.

Overall Index: The overall index, or Business Conditions Index, which ranges between 0 and 100, declined to 50.1 from 51.0 in September. An index of 50.0 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 (www.ism.ws).

“This month the federal shutdown, a pullback in export orders and slower growth in the energy sector more than offset improving construction activity in the region” 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).

Employment: The monthly hiring gauge rose for the month, but remained below growth neutral for the month. The index rose to 49.2 from September’s 48.3. “Manufacturers linked to agriculture and energy are growing at a slower pace than this time last year. On the other hand, metal producers and food processing firms are also expanding at a solid pace,” said Goss.

“This month we asked supply managers how the shutdown affected their firm. Approximately one of six businesses, or 16.7 percent, indicated the shutdown had negatively affected their firm. The remaining 83.3 percent reported that the shutdown had no impact on their company operations,” reported Goss

Wholesale Prices: The prices-paid index, which tracks the cost of raw materials and supplies, dipped to 60.2 from 61.5 in September. "While the inflation gauge remains in a range indicating only modest inflationary pressures, the Federal Reserve’s $85 billion monthly bond buying stimulus program continues to boost asset prices such as ranch and farmland and housing at rates that are not sustainable,” said Goss.

Business Confidence: Looking ahead six months, economic optimism, as captured by the business confidence index, slumped to 41.9 from September’s 42.2. “While we conducted all surveys after the debt ceiling and federal shutdown skirmishes had ended, they clearly had a dampening impact on business confidence,” said Goss.

Additionally the impact of the federal spending sequestration is climbing according to recent surveys. “The last eight months, we have asked supply managers how the federal spending sequestration was affecting their company. In the October survey, more than half - or 53.3 percent - of supply managers indicated that the cuts have had a modest impact on their company to date. The remaining 46.7 percent reported that federal spending sequestration has had no impact on their company operations. But the negative impacts of sequestration are growing,” said Goss.

Inventories: The inventory index rose to 54.5 from last month’s 52.3. “Recent inventory growth is a potential signal that supply managers expect production and/or sales advances in the months ahead. However at this time, we cannot determine if this growth in inventories is planned or unplanned,” said Goss.

Trade: The new export order reading for the Mountain States region increased to a weak 43.8 from September’s 42.2. The import reading for the month advanced to fragile 48.6 from September’s 47.1. “New exports orders have weakened considerably over the past several months. Slow regional growth weighed on purchases from abroad for the month. Over the last several months, the export reading has been moving lower, reflecting slower economic growth among trading partners,” said Goss.

Other Components: Other components used to calculate the overall index for October were new orders at 44.1, down from last month’s 47.6; production or sales at 43.3, down from September’s 45.9; and delivery lead time at 59.6, down from 60.9 in September.

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 overall index is a mathematical average of new orders, production or sales, employment, inventories and delivery lead time.

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 ISM-Utah (www.ismutah.org) and NAPM-Western Wyoming (http://www.ism.ws/sites/westwyoming/index.htm).

Colorado: The state’s leading economic indicator, based on a monthly survey of supply managers in the state, moved below growth neutral for October. The overall index, termed the Business Conditions Index, sank to 44.9 from 52.2 in September. Components of the Business Conditions Index for October were new orders at 37.5, production or sales at 35.0, delivery lead time at 69.8, inventories at 35.9, and employment at 46.3. “Manufacturing slowed significantly for the month, especially that tied to international markets. On the other hand, construction activity remains strong and will boost businesses tied to this sector in the months ahead. I expect a rebound for November as the losses connected to the government shutdown wane,” said Goss.

Utah: The state’s overall index, or Business Conditions Index, a leading economic indicator, slipped below growth neutral 50.0 for the month. Based on the monthly survey of the membership of ISM-Utah (www.ismutah.org), the overall index for October declined to 50.9 from 52.2 in September. Components of the Business Conditions Index for October were new orders at 46.7, production or sales at 43.9, delivery lead time at 57.4, inventories at 51.9, and employment at 49.3. “Energy firms and companies providing support for the energy sector experienced pullbacks for the month. Manufacturing firms are growing output without adding to employment," said Goss.

Wyoming: The state’s leading economic indicator from a survey of supply managers in the state has now climbed above growth neutral 50.0 for 48 straight months. The index, termed the Business Conditions Index, rose to 55.8 from 54.8 in September. Supported by NAPM-Western Wyoming (http://www.ism.ws/sites/westwyoming/index.htm), surveys over the past several months point to positive economic growth in the state economy for the next three to six months. Components of the overall index for October were new orders at 58.1, production or sales at 57.0, delivery lead time at 58.0, inventories at 56.1, and employment at 49.6. “Construction firms, and manufacturers expanded for the month and more than offset pullbacks for mining firms and firms providing support for the mining sector,” said Goss.

November results will be released on December 2, the first business day in December.