Slower growth likely for Oregon.

Byline: Joe Mosley The Register-Guard

The University of Oregon's monthly Index of Economic Indicators suggests that economy watchers should expect more of the same in coming months: slowing but continued growth in the state, with the potential for a shakeup if national figures head south this winter.

"Our growth is slowing or has slowed," economist and index author Tim Duy said Wednesday. "We're at a much more mature point in the business cycle (than in recent years). But as for national trends, I don't see anything in the data yet that is particularly worrisome."

Overall, the UO Index rose six-tenths of a point to 103.6 in July, with gains in six of the eight indicators. The monthly increase in the index followed consecutive declines in May and June.

The only negative factors in July were declines in help-wanted advertising and in the yield spread - the difference between short- and long-term interest rates.

Improvement was seen in the number of initial unemployment claims, residential building permits, nonfarm payrolls, consumer confidence, new orders for core manufactured goods and Oregon's weight-distance tax - a measure of trucking activity.

Duy's UO Index is modeled after the U.S. Leading Index, which is produced by the independent, not-for-profit Conference Board. The Oregon index includes five statewide measures, along with consumer confidence figures from the University of Michigan, nationwide manufacturing orders and the interest rate spread.

In July, first-time unemployment claims in Oregon dropped to their lowest level since March, while nonfarm payrolls rose to their highest level of the year. The state economy added a total of 14,100 jobs through the first seven months of 2007, but Duy pointed out in an analysis of the monthly index that the gain is only about half that of the previous year.

While residential building permits rose by more than 27 percent to 1,890 in July, Duy said the gain was "a balance-off" of a decline from May to June of nearly 25 percent - to a six-year low of 1,483.

Duy said the housing market in Eugene and Portland has remained fairly stable, thanks in part to consistent in-migration of residents from other states. But new building permits in the Bend area have more closely followed the national trend of a deflating real estate bubble, he said.

Duy expects real estate sales to continue declining nationally through the second half of this year before recovering somewhat in 2008.

"Looking into next year, I can see how those (declining) conditions are going to ease back - a fall nationally, and then a move sideways," Duy said. "It's a bubble phenomenon, and bubbles don't re-create themselves easily."

The bottom line appears to be that Oregon's economy appears capable of continuing to grow, but at a slower pace than the past few years.

"With the caveat that nobody knows for sure how this current round of credit tightening will play itself out," Duy said.