Optimism in state economy remains high despite slip, according to Leeds Business Confidence Index
All components of the Leeds Business Confidence Index (LBCI) remained positive despite slight dips from the previous quarter, according to the Leeds Business Confidence Index released Friday.
While expectations were down 3.7 points from the previous quarter, the confidence index showed an increase of 5.1 points over the same quarter last year. Each component of the index reported a decline for the quarter, but all remained positive values. Overall, the index dipped to 59.7 for the third quarter and 57.6 for the fourth quarter.
“Heading into the second half of 2017, the business outlook still remains strong despite reported concerns about Colorado’s talent shortage and infrastructure needs,” said Richard Wobbekind, executive director of the Leeds Business Research Division, which published the report. “We will be keeping a close eye on employment, wages and housing in the second half of 2017.”
Overall, business leaders reported feeling positive about the direction of the Colorado economy. However, they noted a few challenges facing the Colorado economy. For example, more than a fourth of respondents identified labor issues as a primary concern in Colorado’s tight labor market. Obstacles to attracting new employees to the state, according to the business leaders, were the high cost of housing along with the state’s unemployment rate. Respondents also mentioned politics and federal government uncertainty as other major challenges. A need for more investment in infrastructure as the state continues to grow rounded out the top economic hurdles that Colorado faces in the immediate future.
The index measures business confidence – with an index of 50 or higher representing a positive outlook – in the state and national economies, industry sales, industry profits, capital expenditures and hiring plans. The current readings represent six years of positive expectations. To gather this data, the index surveys Colorado business leaders. This quarter, the LBCI received responses from 262 qualified panelists.
Key trends by index component heading into the third quarter of 2017 include:
- State economy confidence has fallen to 60.9, down from 67 in the second quarter of 2017.
- National economy confidence also declined, to 54.6 from 63.9 last quarter.
- Sales confidence took a slight dip, to 62.4 ahead of the third quarter compared with 64.3 ahead of the second quarter.
- Profits confidence saw a similar decline, to 61.2 compared with 62.8 last quarter.
- Capital expenditures confidence fell to 59.5 compared with 61.0 ahead of the second quarter.
- Hiring confidence also dropped, to 59.7 compared with 61.7 ahead of the second quarter.
Colorado’s unemployment rate, which remains lower than the national rate, decreased to 2.3 percent in May 2017—well below the national average. The national rate has declined to 4.3 percent, the lowest recorded since May 2001.
Seasonally adjusted year-over-year employment growth was recorded for all seven of the state’s Metropolitan Statistical Areas (MSAs), with Boulder (+4.7 percent), Fort Collins (+4.1 percent) and Greeley (+3 percent) seeing the fastest expansion. Colorado Springs and the Denver-Aurora-Broomfield MSA were tied, at 2.3 percent, with Pueblo and Grand Junction rounding out the MSAs, at 1.8 percent and 0.3 percent growth, respectively.
Statewide, the biggest year-over-year employment gains in May 2017 were in the leisure and hospitality sector (+4 percent) and the ‘other services’ (+4 percent) sector. The mining and manufacturing sectors both recorded year-over-year job losses.
Visit the CU Leeds School’s Business Research Division for the third quarter report and more information.