Colorado’s economy continued to expand in July although it has slowed slightly since June, according to a survey released Monday.
The Goss Business Conditions Index, based on a survey of supply managers in the state, was a “still solid” 54.2 in July, although it declined from June’s 54.4, according to the report.
An index ranking of greater than 50 indicates economic expansion, while a reading below 50 indicates economic contraction.
Components of the Business Conditions Index for July were new orders 58.0, production or sales, 51.1, delivery lead time at 51.2, inventories at 43.8 and employment at 67.1.
In June 2010, Colorado’s index was 68.4.
“Driven by solid employment gains and unemployed exiting the workforce, Colorado’s unemployment rate has declined 0.7 percent over the past three months,” said Ernie Goss, who conducted the survey.
“Based on recent surveys, I expect continuing improvements in the state’s labor market with somewhat slower job growth and a slight improvement in the state unemployment rate,” said Goss.
The report noted that for the 21st straight month, the overall index for the Mountain States region of Colorado, Wyoming and Utah advanced above 50.0
The survey said that in July the overall index for Colorado, Wyoming and Utah was 57.4 percent – a dip from June’s 58.4.
The bottom line, said the report, is that there should be “slow but positive growth in the months ahead.”
However, the report noted that business confidence in Colorado, Wyoming and Utah “tumbled” in July.
“Elevated energy prices, an unhealthy housing market and uncertainty surrounding the U.S. debt situation remain important factors restraining business confidence,” said Goss.
“The likelihood of a double-dip recession is rising. It is rising but still not imminent,” he added. “The big number will be Friday when the Bureau of Labor Statistics releases the employment numbers.”
If they are negative, Goss said it’s possible that the Federal Reserve could launch another bond-buying program, known as quantitative easing, to drive down long-term interest rates.
Goss said supply managers – the people who buy raw materials and supplies for the companies and institutions that he surveys – indicate they expect upward inflation for those products, an annualized upturn of 7.3 percent.
“This is up from an annualized gain of 6.8 percent recorded in November of last year when we asked the same question,” said Goss. “Clearly, inflation expectations remain high.”
Howard Pankratz: 303-954-1939 or hpankratz@denverpost.com.
