By Michael Virtanen

September 7, 2017 - A West Virginia business index shows an upturn in August coal production and overall 2 percent improvement in the state's economy from a year ago when its recession ended.

In their report Wednesday, West Virginia University economists said their Mountain State Business Index has posted monthly gains for 11 of the past 13 months.

In August, coal production rose 3.9 percent from the previous month, accounting for most of the month's 0.3 percent overall increase.

"We remain confident that West Virginia's economy remains firmly in recovery territory and should post moderate growth over the next several months," said John Deskins, director of the West Virginia University Bureau of Business and Economic Research, which produces the index.

However, the outcomes differ by region and it will still take years to recover all the jobs lost since 2012, Deskins said.

A downturn in coal prices and production and related employment were a significant part of that decline.

The index tracks building permits, unemployment insurance claims, natural gas output, coal production, stock prices related to large West Virginia employers, interest rates and U.S. dollar value.

August's higher natural gas withdrawals and stock prices were offset by negatives in the trade-weighted dollar, building permits for new homes and initial unemployment insurance claims, according to the report.

However, compared to a year earlier, building permits were up 10.4 percent, unemployment insurance claims down 23.7 percent, natural gas production rose 16.5 percent and coal production rose 14.7 percent.

"Growth in coal production has slowed from its springtime surge, but mine output is well above its level of a year ago thanks to increased production activity in the state's southern and northern coalfields," said research assistant professor Brian Lego. "Northern West Virginia production has benefited from higher utilization rates for coal-fired power plants, while the mines in the state's southern counties have seen mine output surge in response to healthier export demand for metallurgical and thermal coal."

Barring unexpectedly strong global economic growth, Lego doesn't foresee West Virginia's output increasing much beyond the current pace. He predicts improved export demand will buoy current production levels over the next few years but eventual declines from the retirement of more coal-fired power plants.

The natural gas industry, though still below 2014 levels, "has emerged from a sustained period of weakness," Lego said. Several firms have increased drilling and six active rigs have begun service since the beginning of the year, while increasing capacity from new pipelines and compressor stations should begin to ease bottlenecks and enable local hub prices to rise, he said.

"West Virginia's economy continues to make positive steps forward after emerging from recession roughly a year ago," Lego said. "While it will take a sustained period of growth for the state's economy to fully recover from such a steep economic downturn, the bulk of evidence points to jobs and output rising within the majority of the state's economic regions into the beginning of 2018."