Colorado business leaders are expecting "solid expansion" in the state's economy for the first time in three years, according to the latest quarterly Leeds Business Confidence Index from the University of Colorado at Boulder's Leeds School of Business.
The index, released Thursday, rose to 54.8 for the third quarter, up from 51.7 in the second quarter.
The index is based on 268 survey responses from state business executives. An index reading of 50 is neutral; a reading over 50 signifies positive growth expectations.
“The greatest point of optimism is that business leaders expect increased investment in labor and capital for the third quarter,” said Richard Wobbekind, director of Leeds' Business Research Division and associate dean for MBA and enterprise programs, in a statement.
“Investment and employment are two important components that will help bring us out of the recession," said Wobbekind, who oversees the survey. "Now that business leaders are expecting these to increase, we think that things are looking up in Colorado.”
Five of six index components in the third quarter indicated expectations for moderate gains and one remained flat, the index report said.
"Hiring and capital expenditures had indexes of 53.3 and 53.7 respectively," the report said. "About 30.2 percent of panelists foresee moderate or strong increases in capital spending in the third quarter, while about 55.2 percent anticipate no change and 14.6 percent project moderate or strong decreases in capital spending. About 29.5 percent of panelists believe that hiring will increase in the third quarter, while 55.2 percent project no change and 15.3 percent anticipate decreased hiring."
The report said that "business leaders’ sales expectations for the third quarter were strong at 59.4, with more than 51 percent of respondents saying they expect sales to increase in the third quarter, while about 35 percent believe sales will stay about the same. Only 14.2 percent expect a decline for their third quarter sales prospects.
“Colorado business leaders remain optimistic that we will outperform the national economy, even though from an employment perspective Colorado has lagged the nation in terms of entering and exiting the recession,” said Leeds School researcher Brian Lewandowski, who compiles the survey results for the index.
The optimistic index report follows a recent downgrade of the Leeds School’s forecast in projected job losses in Colorado, from a loss of 3,200 jobs in 2010 predicted last December to the current prediction of 22,500 jobs lost this year.
“I think the evidence at this point in the year shows that Colorado is lagging the national recovery based on employment data," Wobbekind said. "So that’s pushing back our job growth to a little bit later in the year.”
One factor behind lagging job growth, he said, is that Colorado manufacturing isn’t doing as well as elsewhere in the nation.
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