Phil Castle, The Business Times

New business filings decreased in Colorado on a year-over-year basis during the fourth quarter.

But the drop was attributed in part to the end of a temporary decrease in filing fees. Other indicators tracking economic growth and the labor market continue to reflect resiliency, although slowing could occur.

“Our state remains one of the best places in the nation to start a business,” said Jena Griswold, Colorado secretary of state.

Rich Wobbekind, faculty director of the research division of the Leeds School of Business at the University of Colorado at Boulder, said growth exceeded expectations in 2023, but some slowing is forecast for 2024.

The division prepares a quarterly business and economic indicators report based in part on business filings recorded with the secretary of state’s office. Griswold and Wobbekind joined in a virtual news conference to discuss the latest report.

For the fourth quarter of 2023, the office reported 40,987 new entity filings. That was down 6.6 percent from the third quarter and 16 percent from the fourth quarter of 2022.

New filings typically constitute a leading indicator of subsequent business and job growth.

Wobbekind attributed the quarter-to-quarter decline to seasonal slowing in new business filings. The year-over-year difference was due in part to what in the fourth quarter of 2022 was a surge in filings because of reduced filing fees, he said.

For all of 2023, 195,570 new entity filing were reported, an 11.3 percent increase over 2022.

A total of 174,740 entity renewals were filed in the fourth quarter of 2023. That was down about six-tenths of a percent from the third quarter, but up 2.1 percent from the fourth quarter of 2022.

Business dissolution filings also rose in 2023 to 51,746. That’s a 4.6 percent increase over 2022.

A total of 981,641 entities remained in good standing in Colorado at the end of 2023, up 7 percent from 2022.

Wobbekind said gross domestic product, the broad measure of goods and services produced in the United States, increased 3.3 percent in the fourth quarter of 2023 and 2.5 percent for the full year. That defied what some expected would be a recession or at least slower growth.

Somewhat slower growth in GDP is forecast for the first quarter of 2023, however,  at 2.9 percent.

In Colorado, GDP grew 1.4 percent between the second and third quarters of 2023 and 3.4 percent year over year.

Nonfarm payrolls increased 24,100 in 2023 — an increase of eight-tenths of a percent — with gains in the educational and health service, government and leisure and hospitality sectors more than offsetting losses in the construction, financial activities and manufacturing sectors.

The statewide seasonally adjusted unemployment rate stood at 3.4 percent in December, the latest month for which estimates are available.

Wobbekind said the labor market remains tight in Colorado as demand outstrips supply.

The labor force participation rate — the portion of the population working or looking for work — was 68.4 percent in December, the fourth highest nationally.

But the ratio of job openings to those counted among the unemployed also remained high with 2.2 job openings for every one unemployed person.

Meanwhile, the inflation rate continues to relent, Wobbekind said. The Consumer Price Index for the Denver, Aurora and Lakewood area was up 3.5 percent  in January on a year-over-year basis.

Home price appreciation has slowed in Colorado, he said. Despite reaching a peak in the third quarter of 2023, the Federal Housing Finance Agency all transactions home price index rose just seven-tenths of a percent from the second quarter.

As of mid-February, Colorado gasoline prices were down 29 percent from a year ago.

The outlook for 2024 depends in part on whether or not the Federal Reserve will cut interest rates after raising them to curb inflation. Wobbekind said the Federal Reserve could lower rates a half percent to 1 percent to a neutral rate that neither stimulates or slows the economy.

A measure of confidence among Colorado business leaders rose 1.7 points for the first quarter of 2024. At 45.3, the latest reading of the Leeds Business Confidence Index still reflected more negative than positive responses to the survey upon which the index was based.

Looking ahead to the second quarter, three of six components of the index moved into positive territory.