Utah's business conditions slipped a bit in October but remained "healthy," according to a monthly report generated by Creighton University in Nebraska.
The state's Business Conditions Index for October was 56.5, down from 66.5 in September.
Helping the index was a 57.3 component score for new orders, 59.3 for employment and 58.9 for delivery lead time. Production (53.4) and inventories (48.2) hurt the state's overall index.
The index, compiled from a survey of supply managers and business leaders, ranges between zero and 100. An index greater than 50 indicates an expansionary economy over the course of the next three to six months.
"Utah firms have added jobs at more than three times the rate for the nation for 2005," Ernie Goss, Creighton economics professor and director of the Creighton Economic Forecasting Group, said in a prepared statement. "While I expect Utah to continue to expand at a rate significantly above that for the U.S., the gap between the U.S. and Utah will close considerably in the months ahead."
The Mountain States region's overall index fell to 63.2, down from September's 67.2 and the lowest mark since February. It was the third consecutive month of slipping figures. Colorado's index was at 57.2, down from 60 in September, while Wyoming's was 79.4, up from 79.1 in the prior month.
"Supply disruptions from the hurricanes in the Gulf (of Mexico), a jump in energy costs and rising short-term interest rates have certainly played a major role in the decline in confidence among supply managers and business leaders in the region," Goss said.
Goss noted that the prices-paid index for the region reached its highest level since the survey began in 1994.
The Creighton group uses the same methodology as the Institute for Supply Management, formerly the Purchasing Management Association.
The ISM on Tuesday said the nation's manufacturing activity grew at a slower pace during October as companies increasingly felt the strain of an ongoing rise in energy and raw materials prices. The continuing price increases made it likely that the Federal Reserve, which raised interest rates again Tuesday, will keep nudging rates higher.
The institute said its manufacturing index was at 59.1 last month, down from September's 59.4.
The ISM's measure of costs, its prices index, rose to 84 in October from September's 78. That is a high not seen since May 2004 when the prices index reached 86, but it is well below an all-time high of 100 reached in June 1950.
A separate report Tuesday from the Commerce Department pointed to continued health in the construction business, where spending rose 0.5 percent to another record high in September. Spending reached a seasonally adjusted annual rate of $1.12 trillion as builders took advantage while they could of still-low interest rates — a situation likely to change as the Fed continues its policy of raising rates.
"Rising prices and energy costs in particular are of major concern as manufacturers are struggling to control costs," said Norbert Ore, chairman of the ISM's business survey committee. The ISM, based in Washington, D.C., compiles its monthly economic reports from surveys of corporate purchasing executives.
Stephen Stanley, chief economist at RBS Greenwich Capital Markets, said higher prices were due to increased production at factories and supply disruptions tied to hurricanes Katrina and Rita. "Certainly a big part of what is going on in the cost side is energy related," he said, adding that the economy in the factory sector "has a lot of momentum."
The ISM said executives reported paying higher prices for some 30 raw materials — and lower prices for only one, nickel.
One executive who took part in the ISM's October survey told of the "most price increase letters I have ever seen," while another respondent expressed concern about "the price of oil and its effect on the future prices of commodities."
David Resler, chief economist at Nomura Securities International Inc., said the higher prices faced by manufacturers could put a strain on some company earnings. "The question is whether or not they have the capacity to pass on the higher costs to consumers," he said.