Business conditions strong in Utah and U.S.
But economists warn that warmer-than-normal temperatures, rather than just economic muscle, likely were a factor in February's results.
Utah's business conditions index, based on a Creighton University survey of supply managers and business leaders, increased to 65.6 in February from January's 59.4, according to a report released Wednesday by economics professor Ernie Goss of Creighton in Omaha, Neb.
The Creighton index ranges from zero to 100, with a figure over 50 indicating an expansionary economy over the next three to six months. It uses the same methodology as a national survey conducted by the Institute for Supply Management, a private research group that surveys purchasing and supply executives in approximately 400 industrial companies nationwide.
The separate ISM report released Wednesday showed that the national manufacturing index registered 56.7 last month, compared to 54.8 in January.
"The rebound here was very encouraging and points to very, very solid growth through the first half of the year," said Gerald Zukowski, deputy chief economist at Nomura Securities International Inc. "It was a very solid reading for the manufacturing and the goods producing side."
"Prices, driven by volatility in energy markets, continue to be a major source of concern for ISM's survey respondents," Norbert Ore, ISM chairman, said in a statement accompanying the report.
For the three-state region of Utah, Colorado and Wyoming that is surveyed in the Creighton study, the overall business conditions index leaped to 75.2, a record high and up from 71.9 in January. Colorado's overall index climbed to 70 in February from January's 68.8, while Wyoming reported record-high results, advancing to 93.2 from January's 83.3.
But economists speculated that at least some of the growth reflected in February's reports stemmed from unusually warm temperatures.
"It is certainly clear that record warm weather for much of the region for January and February played an important role in supporting the economy as businesses paid less than anticipated for heating and construction projects normally stymied by winter weather advanced," Goss wrote in the Creighton report. But, he warned, "the real danger is that the warm weather may have fooled many into thinking the economy is doing better than it is."
The regional business confidence index climbed to 86.4, its highest reading since January 2004, and up from January's 80.8. The confidence index gauges survey participants' economic outlook six months out. February also saw a solid upturn in hiring as the regional employment index increased to 72.7 from January's 69.2.
Goss said that though he expects hiring activity to remain positive in the months ahead, it likely will be weaker in the region as the Federal Reserve again moves to raise interest rates. Goss and other economists said Wednesday they expect the Fed will raise interest rates for the 15th consecutive time later this month, and possibly again in May.
"The green light is there for the Fed to continue raising rates. No doubt about it," said Nomura's Zukowski. "The Fed may go again in May unless the economy slows."
E-mail: jnii@desnews.com
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