Colorado business leaders are feeling good about sales and profits heading into the second quarter, with quarterly economic indicators rising into positive territory for the first time in two years.
That doesn't mean they're optimistic about the future, just neutral, according to the latest Leeds Business Confidence Index, compiled by the University of Colorado Leeds School of Business of 178 local business owners and executives. The forecast index for the second quarter was 53.7 out of 100. It has not exceeded the neutral level of 50 since Q2 2022.
“Items within the direct control of survey respondents – industry sales, industry employment, industry profits, and capital expenditures – saw very positive increases in three of those four factors,” the school said. said Richard L. Wobekind, faculty director of business studies. , during a press conference Tuesday. “And maybe these are the things that people are actually seeing, these business people are responding to, and these are the things that they're seeing in the overall state economy.”
Local recruitment was the slowest, but sentiment improved slightly. The survey found that 25.8% of respondents expect hiring to increase this quarter, while 50.6% expect no change. This is in line with previous expectations that job growth will slow this year, Lees said, with growth of 2.1% so far compared to 2.5% last year. . According to recent Bureau of Labor Statistics data, Colorado's latest job openings and turnover survey found that there were 1.7 job openings for every unemployed person in Colorado in January.
Leeds Division Executive Director Brian Lewandowski said the state is seeing a number of trends, from an increase in workers retiring to a slowdown in people moving into the state for work. Colorado already has one of the highest labor force participation rates in the nation, meaning a larger proportion of people over the age of 16 are working compared to other states.
“Current immigration numbers are one of the most concerning aspects of Colorado's economy. After decades of being a source of labor, its momentum has slowed significantly in recent years. '' Lewandowski said. “And if you look at the number of retirees exiting the Colorado labor market…we need to replace 30,000 to 40,000 of those retirees to stay neutral at 0% employment growth. And it has nothing to do with labor market growth.”
Two years ago, business leaders cited Russia's invasion of Ukraine as the main reason for the pessimistic outlook, which caused the Leeds index to fall to 39.8 in the third quarter from 53.9 in the second quarter of 2022. According to the survey, concerns about inflation came in second place. The plan comes at about the same time that the Denver area's inflation rate soared to 9.1%, the highest in decades.
The war may still be on, but businesses have since adapted. Inflation in Denver had fallen to 3.5% in January, and businesses were hoping the Federal Reserve would make good on its promise to cut interest rates this year.
There are signs that sales and profits are improving for Colorado businesses, but about 45% of local companies expect third-quarter sales to be moderate to strong, compared to about 20%. expect the economy to worsen, but economists gave mixed answers to an open-ended question. The question pointed to other reasons why uncertainty still exists. Politics was the second most common reason business leaders gave for this response.
“What jumped up to 10% were comments about uncertainty, and these tended to be more focused on the upcoming election,” Wobekind said. “Many policies will change significantly depending on which candidate wins the election.”
