UO index: Growth expected.
Oregon is on track for continued economic growth, although it will be at a slower rate than would normally occur during an economic expansion, according to the University of Oregon index that tracks the state's economic activity.
Manufacturing continues to be a bright spot in the index, according to the monthly Index of Economic Indicators.
But consumer sentiment, the labor force, housing permit numbers, the unemployment rate and employment in the service sector all factored as drags on growth in the most recent period, according to the index's author, UO economist Tim Duy.
The index slipped 0.3 percent in June, to 91.5 - its first drop since November 2011, Duy said. The index, which projects economic conditions for the next three to six months, uses 1997 as the base year of 100. In general, the higher the number, the better the outlook.
The overall trend in recent months has been that Oregon's economy is growing at about the average growth rate of the last two decades, Duy said, but not at a quick enough pace to put a major dent in the unemployment rate.
And, he cautioned, risks loom, including the ongoing economic crisis in Europe and China's slowing economy. There is also still considerable uncertainty about U.S. fiscal policy in 2013, Duy said.
"While slow but steady growth remains the baseline scenario, there appear to be more downside than upside risks at the moment," he said.
Wells Fargo Bank has been seeing signs of business growth locally this year, as companies begin to buy real estate and equipment, according to Mark Rodewald, the bank's business banking manager for the Eugene and Salem areas.
"In our Eugene market, we are seeing loan production through July that is up over 160 percent" over last year, Rodewald said. "We're up over 400 percent in (Small Business Administration) loan production, which includes start-up companies."
"The good part of that is that 100 percent of that growth is companies that have local employees," he said.
The largest percentage of the growth has been related to health care and transportation/shipping, Rodewald said.
A combination of factors has been driving the loan growth, he said.
"Companies that have had to downsize with the recession have reduced their balance sheets to the point where they can now recognize their profits and can take advantage of opportunities that are coming their way in the marketplace," Rodewald said.
Real estate is one of the primary purchases for these companies, he said, either moving from leased space into space they own or moving into a larger or better space. Companies also are buying equipment, including new trucks and trailers, Rodewald said.
Continuing low interest rates, combined with businesses feeling more secure, also is helping to drive loan growth, Rodewald said.
"Interest rates are good for borrowers," he said, and company managers and owners seem to be thinking that the economy has leveled off, so they want to grab low interest rates while they can.
"We've seen a large drop off in the companies that are distressed," Rodewald said. "That's favorable."
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|Title Annotation:||Local News; The expansion of Oregon's economy, bolstered by manufacturing, will be slower than normal, however|
|Publication:||The Register-Guard (Eugene, OR)|
|Date:||Aug 10, 2012|
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