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UTAH ECONOMIC SNAPSHOT - First Eleven Months FY2008 YTD

Second Largest Employer in Sanpete County to Suspend Operations

• Global Business Confidence
• Global businesses remain very nervous. But despite bad economic news, sentiment has improved in recent weeks. Confidence hit a record low in late April, and while it remains weak and fragile it has noticeably firmed. The most measurable improvement has been among real estate operations, financial services companies, and business service firms. These firms are still dour, but not nearly so. While pricing pressures are elevated, they did recede last week for the second straight week. U.S. businesses are also feeling better, although their confidence remains consistent with a contracting economy. Asian businesses remain the most upbeat while European businesses are now the most pessimistic.

• Consumer Confidence
• According to the ABC News/Washington Post consumer comfort index, sentiment was unchanged at -43 in the week ending June 29. While confidence is showing signs of stabilizing, it is at a level consistent with a severe downturn. Still, consumer confidence accurately captures the health of household finances, which are under considerable stress.

• Semiconductor Billings
• Global semiconductor sales rose by 2.8% in May to $21.83 billion on a three-month moving average basis. As such, sales growth matched seasonal norms. Sales are now 7.5% higher than in May of last year, with gains seen in all regions of the world.

• Employment Situation
• Employment declined by 62,000 in June, in line with consensus expectations. The labor market continues to contract at a moderate, steady pace. Losses for both April and May were revised deeper, to 62,000 and 67,000, respectively. The unemployment rate was unchanged at 5.5%. Most of the losses were concentrated in goods-producing industries, while service-producing industries eked out a small gain.

• Job Cuts
• In June, companies and non-profits announced job cuts affecting 81,755. While this is lower than the total for May (103,522), the second quarter total was at its highest since the fourth quarter of 2005. The financial sector led all others in cuts in June.

• Employment Index
• The Monster Employment Index fell by 3 points in June, coming in at 163, the lowest value since January. Although seasonal factors may have contributed to the fall in June, the index remains about 12% below its year-ago level, unchanged from a month ago. The details of the report suggested that declines in online job demand continued in a broad number of industries, with only four of the industrial categories tracked by the index reporting month-ago increases.

• Jobless Claims
• Initial claims jumped to 404,000, more than expected. Some of the surge in initial claims likely stems from the flooding across portions of the Midwest.

• Personal Income
• Personal income soared 1.9% in May, following April's 0.3% growth. Income growth was inflated by the effects of the tax rebates. Excluding those, personal income rose 0.4% in May, up from 0.2% in April. Spending growth jumped to 0.8% from 0.4% the prior month. Real spending rose half as much. The core PCE deflator rose 0.1% again, while the top-line deflator rose 0.4%. The savings rate soared to 5% as a result of the tax rebate inflation of disposable income.

• Factory Orders (M3)
• New orders for manufactured goods rose 0.6% in May, exactly matching consensus expectations. The first print on durable goods orders, which were flat over the month, was unrevised. Nondurable goods orders/shipments rose 1.2% in May following a 3.5% increase in April. Total manufacturing shipments were up 0.1%; the increase in nondurable goods shipments barely offset a decline in durable goods shipments of 1.1%. Inventories and unfilled orders rose over the month as well.

• Agricultural Prices
• The Preliminary All Farm Products Index of Prices Received by Farmers increased 7.3% in June from May. The all crops index rose 11%, driving aggregate gains, and the livestock index increased 2.2%. Prices received for corn and soybeans were higher, while prices received for wheat decreased. Prices paid by farmers for their means of production rose 1.6%, led by higher prices for feed grains and diesel fuel.

• Construction Spending (C30)
• Construction spending decreased by 0.4% in May, slightly less than expected. Private construction declined by 0.7%, driven down by a 1.6% decline in residential construction. Public construction increased by 0.4% from April.

• Case-Shiller Home Price Indices
• The first quarter Case-Shiller house price indices indicate a dismal housing market. Nationally, house prices are down an annualized 23% from the fourth quarter, 16% below the mid-2006 peak. House prices in California's Central Valley are sliding the quickest in the nation, declining by about 40% y/y. Price declines are also hitting metro areas on Florida's west coast hard. Prices are falling in nearly all the markets. The few exceptions are located in Tennessee and Pennsylvania.

• MBA Mortgage Applications Survey
• The MBA market composite indices finished higher for the week ending June 27. The modest increase was led by a larger volume of refinancing contracts as the refinance index finished higher by 4.7% compared to last week, perhaps benefiting from a small drop in 30-year fixed rate mortgage interest rates. The purchase index also finished up by 2.8%, while the overall market index is higher by 3.6% compared to last week.

• Chain Store Sales
• Chain store sales increased a slight 0.1% in the week ending June 28, according to the ICSC. Year- over-year growth was unchanged at 2.2%, matching the strongest rate in eight weeks. Sales were reportedly focused on basics and hurt by high energy prices and economic worries.

• Natural Gas Storage Report
• Working gas in underground storage rose by 85 billion cubic feet during the week ending June 27, below consensus expectations of an 89 bcf build. Working gas in underground storage was 2,118 bcf as of June 27, 381 bcf lower than a year ago, and 57 bcf below the five-year average for this time of year.

• Oil and Gas Inventories
• Crude oil inventories fell by 2 million barrels for the week ending June 27, according to the Energy Information Administration, more than the expected 0.1 million barrel decline. Gasoline inventories rose by 2.1 million barrels, contradicting expectations of a 0.2 million barrel decline. Distillate supplies rose by 1.3 million barrels, falling short of expectations of a 1.9 million barrel build. Refinery operating capacity improved to 89.2% from 88.6%. This report should send oil prices higher.

Source: Economy.com 2008