Colorado Business Confidence Surges Going Into Second Quarter
The confidence of Colorado business leaders has surged going into the second quarter of 2013, according to the most recent Leeds Business Confidence Index, or LBCI, recently released by the University of Colorado Boulder’s Leeds School of Business.
With waning uncertainty giving way to a stabilizing economy, the second quarter LBCI posted a reading of 58.1, a sharp increase from last quarter’s 51.3 reading. Expectations measured positive—at 50 or higher—for all of the metrics measured by the index. They include hiring and capital expenditures, the state and national economies, and industry sales and profits.
For the first time, index participants were asked about sequestration in addition to other factors that could derail economic growth. Respondents expressed more concerns about the potential for tax policy and consumer confidence to have negative impacts than the federal spending cuts that took effect on March 1. Also, many LBCI respondents indicated that the European debt crisis poses no risk to their businesses.
“When we get significant upticks, like we saw in this quarter, it really does give us quite a bit of optimism that businesses are seeing overall improvements in the marketplace,” said economist Richard Wobbekind, executive director of the Business Research Division.
“It’s really important to note that this is the 10th anniversary of the Leeds Business Confidence Index so we have a pretty long track record looking at the economy and we have had significant and consistent participation from our panelists over the decade.”
Significantly, according to Wobbekind, the hiring plans index recorded the greatest surge among all of the LBCI components, increasing to 57.5 from 49.3 for the second quarter. The capital expenditures index rose to 56.9 from 50.1.
Confidence in the state economy, which increased to 62.1 from 55.5 last quarter, outstrips that of the national economy. The state economy reading is the highest it’s been in the past year.
Confidence in the national economy tipped the scale from negative to positive territory in the second quarter of 2013, increasing to 50.4. Last quarter, the reading was 47. The outpacing of confidence in Colorado’s economy compared with the national economy is a 32-quarter trend, based on LBCI results.
Business leaders’ sales expectations for the second quarter shot up to 62.3 from 54.4 for the first quarter. Also, second quarter confidence in profits rose to 59.4, up several points from 51.6 last quarter.
In January, labor markets in all of the state’s metropolitan areas saw growth, compared with January 2012. Some of the areas showing the highest growth include Boulder, the Denver-Aurora-Broomfield region and Greeley.
Statewide, the biggest employment gains in January compared to the same month last year were in the professional and business services sector with the addition of 13,900 jobs. The trade, transportation and utilities sector saw the addition of 12,300 jobs, and the leisure and hospitality sector gained 11,900 jobs.
The Leeds School’s Business Research Division conducts the LBCI, now in its 10th year.