Arizona Business Conditions Index: Arizona Economy Remained in Mild Recession in June
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Tom Rex (480) 965-9271
Debbie Freeman Arizona Business Conditions Index:
Arizona Economy Remained in Mild Recession in June
TEMPE, Ariz. (July 1, 2008) - In June 2008, the Arizona Business Conditions Index was below 50 for the seventh time in the last nine months. An index less than 50 suggests a contracting economy.
"The June index value of 46.7 suggests the mild recession in the Arizona economy continues," said Tom R. Rex, associate director of the Center for Competitiveness and Prosperity Research in the W. P. Carey School of Business. The Arizona Business Conditions Index is a product of the School's JPMorgan Chase Economic Outlook Center.
In June, four of the five components of the Arizona Business Conditions Index had a reading of less than 50. It was the ninth straight month that the value of the purchased materials inventory level was less than 50. The new orders received index was less than 50 for the seventh time in the last nine months, and the employment index registered less than 50 for the fifth time in the last seven months. The production/business activity index also was less than 50, though for only the third time in the last seven months. The delivery time on orders placed index, which typically lags behind the other measures, was the only component with an index above 50.
"The prices index exceeded 77 - a very high value - for the fourth consecutive month," Rex said. "Since changes in prices frequently are countercyclical, the prices index is not part of the composite Arizona Business Conditions Index."
The Arizona Business Conditions Index is based on data compiled monthly from a survey of purchasing and supply managers across Arizona, representing a cross-section of all sectors. The survey queries whether activity in the respondent's organization was higher, the same, or lower than in the previous month on several measures of business conditions. Five of these measures (new orders received, purchased materials inventory level, delivery time on orders placed, employment, and production/business activity) are equally weighted to form the composite Arizona Business Conditions Index. The composite index is a coincident indicator of economic activity that provides the earliest indication of the monthly performance of the economy.
A composite index of less than 50 suggests that economic activity is declining. An index of between 50 and 55 typically indicates that the economy is experiencing weak growth. A value between 55 and 60 generally is associated with moderate economic gains, while an index greater than 60 usually occurs at times of strong economic increases.
W. P. CAREY SCHOOL OF BUSINESS
The nationally ranked W. P. Carey School of Business at Arizona State University is home to 10 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 wpcarey.asu.edu and http://knowledge.wpcarey.asu.edu/.
