CU: Colorado business confidence at 5-year high

Denver Business Journal – Date: Friday, April 1, 2011, 1:42pm MDT

Richard Wobbekind, Leeds School economist and director of its Business Research Division.

Colorado business leaders’ confidence is at its highest level since the second quarter of 2006, according to the most recent quarterly Leeds Business Confidence Index from the University of Colorado Boulder’s Leeds School of Business.

For the second quarter of 2011, the index, released Friday, posted a reading of 56.8, up from 54.8 for the first quarter. The most significant change to the index came in hiring plans, which rose to 56.3 in the second quarter from 52.5 in the first.

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A reading of 50 in the survey of state’s business executives is neutral; an index greater than 50 indicates positive expectations and lower than 50 means negative expectations.

The Leeds index found that expectations for sales, industry profits, hiring plans and capital expenditures all recorded strong gains.

“Higher sales and profits are fueling a lot of the business confidence that is out there now, and this is clearly turning into plans to invest in capital equipment and hire more people, which is very important for the long-term growth of the economy,” Richard Wobbekind, Leeds School economist and director of its Business Research Division, said in a press release.

A rising state unemployment rate and increasing confidence among Colorado business leaders may seem like a mixed economic message, Wobbekind said, but such occurrences are common during an economic recovery.

“One of the things that happens with the unemployment rate is it typically goes higher as firms start to hire because people who have been out of work start to come back into the work force again,” Wobbekind said.

Another factor leading to a higher unemployment rate is population gains in the state, he said.

The Colorado unemployment rate in February was 9.3 percent, up from 9.1 percent in January and a new 35-year high for the state.

Wobbekind thinks the high unemployment rate may actually be a good thing.

“It signals to the rest of the country that this isn’t an easy place to get a job,” Wobbekind said. “This will probably slow down some of the flow of job seekers into the state, which is good until we get our employment growth a little further along.”

The Leeds index echoed the findings of the latest monthly Mountain States Leading Economic Indicator report for Colorado, also released on Friday by economist Ernie Goss.

Goss’ monthly index for Colorado rose to 59.7 in March from 57.1 in February.

Business leaders remain positive, but somewhat subdued, regarding national and state economic growth, according to Leeds School researcher Brian Lewandowski, who compiles the survey. The national index increased from 53.2 to 53.6, while the state index fell slightly, from 56.5 to 55.5.

By category, the index broke down this way:

• Hiring expectations — 56.3, up from 52.5 last quarter

• Capital expenditures — 56.1, up from 53.6 last quarter

• Sales expectations — 61.4, up from 58.3 last quarter

• Profit expectations — 58.1, up from 54.9 last quarter

Click here for the latest Leeds Business Confidence Index report.


Compiled by the DBJ’s Heather Draper | denvernews@bizjournals.com

Read more: CU: Colorado business confidence at 5-year high | Denver Business Journal

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