Colorado biz leaders confidence soars

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, or LBCI, released by the University of Colorado Boulder’s Leeds School of Business.

For the second quarter of 2011, the LBCI posted a reading of 56.8, with the most significant change to the index coming in hiring plans. The index measuring hiring plans rose from 52.5 in the first quarter to 56.3 in the second.

While confidence in the state and national economies has leveled, expectations for sales, industry profits, hiring plans and capital expenditures all recorded aggressive gains, according to Leeds School economist and Business Research Division Director Richard Wobbekind, who conducts the quarterly survey.

“A continued upward trend in all of the indicators suggests that Colorado business leaders see sustained growth over the next quarter and even beyond,” Wobbekind said. “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 hiring more people, which is very important for the long-term growth of the economy.”

An index of 50 is neutral. An index greater than 50 indicates positive expectations, while an index lower than 50 indicates negative expectations, according to Leeds School researcher Brian Lewandowski, who compiles the survey results for the index.

Colorado’s unemployment rate actually has increased over the past couple of months, even though the business leaders’ index for hiring rose at a hefty rate this quarter. Wobbekind said such mixed messages concerning unemployment rates are common during economic recoveries.

“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 workforce again,” Wobbekind said.

However, that’s only part of the story, he said. Colorado’s unemployment rate was recently revised to a higher rate based on population gains.

“I think this is actually a good thing because 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 jobseekers into the state, which is good until we get our employment growth a little further along.”

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

Capital expenditures had an index value of 56.1, up from 53.6 last quarter. The sales and profit expectations of business leaders are back to prerecession levels, and are at their highest level since the second quarter of 2007, according to Lewandowski. The sales index was 61.4 and profit index was 58.1.

To access the complete report visit http://leeds.colorado.edu/lbci.

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