A Creighton University economics professor is predicting that Utah's job outlook will improve in the next few months.

Ernie Goss, as part of his Mountain States Business Conditions Index, noted a more-steady manufacturing sector for the first part of the year.

"In terms of jobs, Utah's manufacturing sector has declined to its lowest level since 1994," he said Monday in a prepared statement. "However, manufacturing job losses have stabilized, with the state losing less than 1,000 manufacturing jobs for the first five months of 2003. I expect the weaker dollar to contribute to job gains for both the manufacturing and non-manufacturing sectors of the state."

The state's overall index, based on a survey of supply-chain managers and business leaders, climbed to 50.3 in May, up from April's poor 44. The index ranges from zero to 100, with an index over 50 indicating expansionary economic conditions for future months.

Goss' survey uses the same methodology as the national survey used by the Institute for Supply Management, which has surveyed its membership to gauge business conditions since 1931.

That organization on Monday said its manufacturing index rose to 49.4 last month, up from 45.4 in April, suggesting the manufacturing sector finally could be poised for recovery. The reading signals a continuing decline in manufacturing business activity but at a considerably slower rate.

The reading marked the third consecutive month of decline, but it topped the expectations of analysts and fueled speculation of a coming rebound in manufacturing.

"It does suggest the manufacturing sector is recovering," said John Silvia, chief economist for Wachovia Corp. "It appears as if the orders are there, and there are backlogs behind these orders so that there's some sustainability in terms of economic growth going forward."

Contributing to Utah's improvement in the Creighton study were the indexes for new orders, 51, and production, 52, which offset a weaker employment reading of 48.

Utah still lagged its neighbors in the report. Colorado's overall index for May was 61.8, up from 56.1 in April. Wyoming's 52.3 was down from the previous month's 61.3 and represented a record low for that state's index.

The three-state region combined for an overall index of 51.5, up from 48.9 in April. It was the second straight increase and seen as a sign that the Mountain West is headed toward an economic improvement over the next few months. The overall figure was aided by new orders, 52.8, and production, 57.9.

"However, businesses achieved higher production levels by extending hours worked for current employees and by productivity improvements," Goss said. "As a result, businesses continue to report weak hiring."

The employment index was at a poor 42.1 for May, despite being up from April's 38.1.

"Companies are meeting profit and production targets with current or lower levels of employment. The continued weakness indicates that unemployment is likely to rise in the months ahead before the rate begins to decline by the end of summer."

The index for prices paid fell to 63.2, its lowest level since November.

"As a result of lower oil prices, businesses are reporting reduced inflationary pressures. I estimate that the price for a barrel of oil will decline from its current level of $29 to $22 to $25 by the end of summer. Downward pressure on the prices-paid index provides the Fed with even more flexibility to move lower on interest rates at its June and future meetings," Goss said.

The index for new export orders grew in May to 53.8, due in part to a weaker dollar that made U.S. goods cheaper abroad.

"Recent declines in the value of the dollar are having very positive impacts on the regional economy, especially for businesses selling in Europe, though many politicians are railing against recent dollar declines," he said. "Thus far, the declines have had positive impacts on businesses in the region, and, for that matter, the rest of the nation.

"This year, the Mountain States region has lost almost 5,000 manufacturing jobs. I expect the weaker dollar to stop the manufacturing job losses for the region."

The confidence index — reflecting survey participants' economic outlook six to nine months out — increased fro 55.3 from April's 50, helped by the end of the war in Iraq and lower energy prices.

The relatively upbeat tone of the national ISM report contrasted with figures released by the government Monday showing a drop in construction spending to the lowest level in four months.

The Commerce Department said the value of construction projects declined by 0.3 percent in April to a seasonally adjusted annual rate of $862.6 billion, the third consecutive month of falling construction spending.

That was weaker than expected by economists, who had forecast a 0.2 percent increase.

Silvia said the ISM figure for May counters a government report last week showing orders to U.S. factories for durable goods dropped in April. "There are signs of life in manufacturing," said Norbert J. Ore, who oversees the index for ISM.

Ore noted that his group's gauge of new orders to factories and production both topped 50 after two months of declines and that the prices paid by manufacturers for materials rose at a much slower rate.

Investors had been looking forward to improved results following the release Friday of better-than-expected manufacturing figures. Those figures, reported by the Purchasing Management Association of Chicago, often foreshadow results of the national survey.

The last time the ISM index showed growth in manufacturing was in February, when it reached 50.5.

The May index hints at some good news for manufacturers. ISM's measure of new orders to factories rose from 45.2 in April to 51.9 in May. Production at plants also improved, rising from 47 to 51.5.

Other components of the ISM index continued to show a decline, but nevertheless improved. The measure of employment, for example, rose to 43 from 41.4.

Of the 20 industry sectors surveyed by ISM, 11 reported growth including petroleum, glass, stone and aggregate materials; chemicals; and fabricated metals.

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Ore said there was a split among supply managers surveyed by his group, with some seeing an uptick in business while others still saw their business stalled or are uncertain.

"This is not really unusual when the economy is at a crossroads," he said. "Judging by the reversal in a number of the indexes this month, we are apparently at or near a crossroads."


Contributing: The Associated Press

E-MAIL: bwallace@desnews.com

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