Manufacturers report positive outlook
BYLINE: Cathy Proctor
Manufacturers are feeling positive about their operations and the short-term future largely because of easing natural gas and gasoline prices.
"Companies that we're working with are feeling more optimistic and we're starting to see some expand," said Elaine Thorndike, CEO of the Colorado Association for Manufacturing and Technology.
"The efforts that they've put into implementing cost reductions have resulted in their ability to make investments in expansion and new markets."
And the highest number of people in two years were working in the state's manufacturing sector in August, according to preliminary figures from the U.S. Department of Labor.
The figures show 152,400 manufacturing employees in Colorado, up from 151,300 in July and reaching a level not seen since October 2004, when the department counted 152,500.
Gasoline prices in Colorado averaged $2.45 per gallon on Oct. 10, down from $2.87 just a month ago, according to AAA. Crude oil prices have plummeted 25 percent in recent weeks and closed at under $60 per barrel on Oct. 10, although they're still double the price from three years ago.
According to a 2006 directory of companies compiled by Manufacturers' News Inc., there are 6,795 manufacturing companies in Colorado. Of those, 3,906 distribute products outside the state and 1,426 distribute their products internationally.
The positive outlook is reflected in three surveys of manufacturers and business leaders in the West, Colorado and Denver.
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A survey by the Tenth Federal Reserve District, which includes Colorado, released Sept. 28, said manufacturing activity in the district grew slower in September compared to previous months, but was still well above year-ago levels. Plant managers remained optimistic about future growth, according to the Federal Reserve Bank's survey.
The survey also found that materials price pressures eased somewhat, but finished goods price increases were expected to persist.
The district covers Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.
Month-to-month, 33 percent of managers reported an increase in manufacturing production in September compared to August, while 43 percent reported no change and 21 percent reported a decrease.
Year over year, 55 percent of respondents reported an increase in production in September 2006 compared to September 2005.
Looking ahead, 46 percent of managers said they expected production increases in the next six months, 31 percent expected no change and 20 percent said they expected production to drop, according to the survey.
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The index for Denver manufacturers rebounded to a level of 60.5 in September, up from a dismal 43.3 registered in August, according to the Denver chapter of the National Association of Purchasing Management.
The July PMI index for Denver manufacturers was 56.6.
An index below 50 indicates the majority of survey respondents reported a decline in activity compared to the previous month. The further below 50, the greater the number of respondents reporting a decline. An index over 50 indicates growth, increase or improvement.
The survey is a joint exercise of the Denver chapter and the University of Colorado at Denver's College of Business.
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On a more statewide basis, the Colorado Business Condition's Index gave supply managers' and business leaders' attitudes a 65.8 in September on a scale of 1-100, with anything above 50 considered a positive attitude. Creighton University in Omaha, Neb., created the survey for the index.
That's down from an August reading of 71.3, but the leading economic indicators point to healthy growth for the state in the last quarter of 2006, according to the survey.
"Growth in the Colorado economy is slowing but remains vigorous in comparison to the nation," Ernie Goss, the Creighton University economics professor who conducted the survey, said in a statement. "Durable-goods manufacturers reported softer economic conditions while nondurable producers, except for food processors, detailed expanding business activity for the month."