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May 2, 2008 - 11:37AM
Updated: May 2, 2008 - 2:55PM
Growth returning to Arizona economy, ASU index suggests
Comments | RecommendEd Taylor, Tribune
The Arizona Business Conditions Index has moved into growth territory for the first time since November, indicating that growth, albeit small, is returning to the Arizona economy.
The index, which is compiled by the W. P. Carey School of Business at Arizona State University, stood at 52.2 in April, the first time that it climbed over 50 since November, when it also recorded 52.2.
Any reading above 50 indicates the economy is growing, and below 50 suggests economic contraction.
The index is based on surveys of supply-chain managers at Arizona companies.
In the latest cycle, the index hit a low of 46.3 in February and rose to 49.3 in March.
“Fifty-two point two is not stellar, but at least now we’re going the other way,” said Dawn McLaren, research economist at the business school. “We took two steps toward the good side.”
McLaren said the production component of the index was primarily responsible for the move into positive territory. It stood at 55.6, the highest since November. But she also was pleased with the new orders component, which registered 54.5.
That indicated that more new orders were flowing in during the month, and economic activity will have to continue in the future to fill those orders, she said.
A negative indicator in April was the price index, which stood at 77.6, down slightly from March but still suggesting strong upward pressure on prices.
In a perverse way, rising prices could be a positive sign for the economy because they might encourage companies to stock up on supplies before they become more expensive in coming months, McLaren said. If prices start to moderate, companies could pull back on purchases because they don’t see such a pressing need to beat future price hikes, she said.
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