News
Region’s (Billings) economy shows signs of improvement
Economic conditions in the region showed some improvement in May, according to economic indicators tracked by the Center for Applied Economic Research at Montana State University-Billings.
Billings Gazette
Four of the seven indicators tracked by the center rose during the past month.
"The rocky road that the economy has been on is beginning to smooth out a little in our area," according to Ann Adair, chief economist at the center. "We are getting a few more positive signs in the economy than we had earlier this year."
The center’s analysis of market segments follows:
Consumer perspective
The perspective for regional consumers has shown slight improvement during the past month. The employment picture appears brighter than in earlier months, petroleum price increases have subsided and consumers are feeling more optimistic with the passage of upcoming tax cuts. Nationwide, the Consumer Price Index fell three-tenths of 1 percent during April and personal savings relative to personal income increased from March levels. Cautious optimism probably best describes the mood of consumers at the present time.
Business perspective
The Producer Price Index, which reflects prices paid by businesses for production inputs, fell 2 percent during April and, nationwide, productivity levels rose. Both are indicators of improving business conditions although many businesses will continue to watch for greater signs of recovery before undertaking any expansion. Preliminary estimates of first quarter Gross Domestic Product, a measure of the value of goods and services produced in the economy, rose 1.9 percent, continuing the 1.4 percent increase seen during the fourth quarter of 2002. Consumer expenditures continue to drive the economic recovery while imports of products continue to decline. All in all, the outlook for businesses is improving.
Employment
The region’s May employment index fell slightly below revised values for the April index. The unemployment rate in the region fell slightly more than one-tenth of 1 percent for the May indicators. Approximately 1,000 more people were working than during the previous month. The help-wanted index increased for May by almost 17 points, equaling the levels recorded one year earlier. The bulk of the additional positions offered were in the general category. Medical and professional positions remained virtually unchanged from the previous month.
Agriculture
The agricultural sector continues to show improvement during the latest month. The index of agricultural prices received rose five points from the April levels. While wheat prices remained low, cattle prices showed improvement in all categories during the month. Despite additional rainfall earlier, hotter than normal weather has reduced soil moisture conditions somewhat, while range and pasture conditions remain essentially unchanged. Although moisture conditions are adequate for now, lack of additional rainfall and high early runoff of snow pack may still leave farmers in a precarious position later in the summer.
Foreign trade
The foreign trade index rose six-tenths of a point between April and May, but was almost 3 points above levels of one year earlier. The value of the dollar continued to decline slightly, making regional goods less expensive to other countries. The dollar value of products exported from the region rose 4 percent from the levels in the April index. Without significant nationwide economic recovery, regional exporters will likely continue to benefit from a weaker dollar.
Bizdaq
The composite Bizdaq index, which tracks stock values for companies with significant employment within the region, showed good improvement during May but remained almost 10 points below levels of one year earlier. The largest gains were seen in the technology sector, energy sector and agricultural sector. Modest improvement was seen in retail, medical, transportation, manufacturing, travel and media sectors. The financial sector was essentially unchanged from the end of April. The improvement in these indexes implies that investors are recovering confidence in businesses and believe that profits will improve from this point forward.
Energy
The May energy index continued the decline recorded in the April index. Much of the downward pressure was a result of the continued decline in petroleum-related wholesale prices. The petroleum price index fell 26 points from levels recorded in April. Crude oil prices continued to decline another 17 percent and the earlier decreases finally began to show up in wholesale prices for gasoline and diesel. The energy production index fell by 1 point during the month with declines in coal production being offset by increasing electrical generation.
Housing
Although the May housing index equaled levels of one year earlier, it fell 3 points from April. The ratio of closings to listings declined to almost 50 percent when compared to one year earlier as a result of higher listings levels rather than a significant decline in closings. The average price of houses in the region continued to decline slightly, again probably related to a smaller number of homes constructed and sold during this period. As long as interest rates remain low, the housing sector is expected to remain relatively strong.
Travel
The May tourism index continued to fall from April levels due primarily to declines in Yellowstone Park visitations and lower deplanement figures. This is not unexpected as last year during this period, the region saw the impact of increased travel by bowling tournament participants. Prices for 21-day advance airline tickets between Billings and most major cities continued to decline, falling 8 to 38 percent below levels of one month earlier. A reduction in both ticket prices and gasoline prices should be reflected in gains in this index in the coming months.
The analysis was prepared by Adair and Scott Rickard, associate director at the Center for Applied Economic Research at MSU-B.
Copyright © The Billings Gazette, a division of Lee Enterprises.
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