Colorado small business index rises despite national economic drag
A monthly index tracking conditions for small businesses in Colorado increased for the first time in five months on improving labor trends.
The state economy likely would fare even better were it not for a weak national economy, said Jeff Thredgold, a corporate economist who calculates the Vectra Bank Colorado Small Business Index. “The Colorado economy would perform far better in coming months if it wasn’t hindered by the sluggish recovery in the U.S. economy.”
The SBI advanced to 114 in August, up two tenths from a revised 113.8 in July. The gain was the first since March, when the index stood at 121.7. Four consecutive months of decreases then followed what had been an 18-month streak of increases. At this time last year, the SBI was lower at 101.6.
The index measures conditions from the perspective of a small business owner or manager. Higher numbers reflect more favorable conditions.
The statewide seasonally adjusted unemployment rate, the most heavily weighted of 14 components of the index, held steady at 8.5 percent in July, the latest month for which estimates are available.
The pace of job growth in Colorado continues to accelerate, however.
Nonfarm payrolls grew 3,200 in July, bringing total gains over the past year to 18,600. That compares to a revised gain of 16,200 net jobs in the prior year-over-year period. Job growth, income gains and the resulting increase in retail sales help small businesses and push up the SBI.
Even as small businesses in Colorado rebound from the recession, the national economy hasn’t fared as well, Thredgold said. Global, national and regional economic performance all are components of the index.
Gross domestic product, the broad measure of goods and services produced in the country, rose at a meager annual rate of only 0.7 percent during the first half of 2011. While most economic forecasters have lowered their expectations for growth over the next year, some see another downturn about to unfold or already under way, Thredgold said.
Meanwhile, U.S. job growth ground to a halt in August with no net gain in estimated nonfarm payrolls. August was the first month in 11 months in which there was no net gain in nonfarm payrolls.
Thredgold said the extended debate over the national debt ceiling, the Standard & Poor downgrading of U.S. debt, concerns over European debt and a volatile stock market have affected business confidence and, in turn, hiring.