Three Months and Counting: Arizona Business Conditions Index Below Critical 50 Mark

carolyne.kennedy@asu.edu
(480) 965-7774

TEMPE, Ariz. (March 3, 2008) - For the third consecutive month, the Arizona Business Conditions Index has registered a level below the critical 50-mark, indicating contraction in the economy in the short term. The overall index fell to 46.3 in February, a 4 percent drop compared to last month.

In February, the production component of the overall index dropped to 44.3, significantly below the January level of 53.7. The new orders component also slipped across the 50-mark, to 48.2 in February from 51.7 the previous month.

"The Arizona Business Conditions Index first dropped below the critical 50-mark in October 2007 when it slumped to 49.2. It recovered slightly in November 2007 but February 2008 marks the third consecutive month below 50," said Dawn McLaren, research economist at the W. P. Carey School of Business. "The Index usually provides a four to six-month heads up on growth and recession in the local economy. It is the Arizona version of an Institute of Supply Management's 'Report on Business,' but with the goods-producing and service-providing sectors combined into one index."

The Prices Index for Arizona is computed separately from the overall index. In February, the Prices Index rose to 69.1 from 67.3, indicating continued upward pressure on prices. The Prices Index has remained in the upper-sixties and low-seventies since March 2007. The last time the Prices Index registered a neutral reading was in April 2002 when it recorded a level of 50.4. In October 2005, it hit 80.3. The lowest reading ever for the Prices Index was 41.4 in October 1962 and the highest was 95.5 in December 1973.

The Arizona Business Conditions Index is updated monthly and is available on the Web at http://wpcarey.asu.edu/azbci. The site contains current and past press releases, graphs and historical data.

W. P. CAREY SCHOOL OF BUSINESS
The nationally ranked W. P. Carey School of Business at Arizona State University is home to nine research centers that serve as a link between the local, state, national and international business communities and the creative and intellectual resources of the school. The W. P. Carey School also publishes Knowledge@W. P. Carey, a bi-weekly online resource that offers the latest business insights, information and research from a variety of sources. For more information please visit http://wpcarey.asu.edu and http://knowledge.wpcarey.asu.edu.