Output in Utah continues its climb
Utah manufacturing activity in September climbed to the highest level in seven months as companies linked to energy production turned robust demand and high prices to their advantage.
The overall index of manufacturing conditions advanced to 61.7 from an already healthy 60.6 in August, the Goss Institute of Economic Research said Monday. A reading above 50 indicates growth; 57 is considered robust.
"Manufacturers, both durable and nondurable, in the state are experiencing healthy growth," economist Ernie Goss said. "Utah firms with ties to energy are expanding and will continue to grow as the Federal Reserve's cheap money policies push energy commodity prices higher."
Among the components of the monthly index, production and new orders were strongest, with readings of 70.8 and 62.7, respectively. That suggests production will increase in the coming months.
The employment component, at 51.8, weakened from 53.2 in August, indicating that companies didn't add a lot of workers last month to keep up with demand. That could change, though. On Monday, the price of oil finished higher after the Institute of Supply Management said that its national index of manufacturing activity rose to 51.5 the first upward move in four months. In August, the index was 49.6.
The U.S. reading "will boost hopes that some of the recent slowdown in economic growth was just a summer phenomenon," Paul Dales, an economist at Capital Economics, said in a note to clients.
The increase could signal that factory activity is picking up after a weakening this spring because of declining consumer demand and a drop in exports.
The improvement in the United States comes even as growth is slowing overseas. Europe's financial crisis has pushed many countries in the region into recession. Growth in emerging nations such as India and China has slowed.
The U.S. economy grew at an annual rate of just 1.3 percent in the April-through-June quarter, down from a 2 percent growth in the previous three months. Most economists expect growth will stay near or below 2 percent for the rest of this year too slow to lower the unemployment rate.
The Associated Press contributed to this story.