Phil Castle, The Business Times

Even as economic indicators reflect continued growth, Colorado business leaders remain wary heading into the third quarter, according to the latest results of an index tracking their expectations.

“While most economic data shows the U.S. remains in a growth cycle, business leaders’ responses signal tempered optimism and caution as we enter the second half of the year,” says Brian Lewandowski, executive director of the business research division of the Leeds School of Business at the University of Colorado at Boulder.

The Leeds Business Confidence Index retreated 3.1 points between the second and third quarters to 50.6. The latest reading remained above 50 for a second straight quarter. Readings above 50 reflect more positive than negative responses to the survey upon which the index is based. But looking ahead to the fourth quarter, the reading was slightly lower at 49.9.

All six individual components of the index decreased between the second and third quarters, two of them to below neutral 50.

The business research division of the Leeds School of Business calculates the index based on the results of quarterly surveys of business leaders from across the state and industry sectors.

Out of 201 leaders who responded to the third quarter survey in June, 150 offered open-ended explanations for their outlooks. While 26 percent of those who responded attributed their responses to higher interest rates, 21 percent cited uncertainty over the upcoming election and 17 percent their general sentiments.While 10 percent of respondents expressed optimism for the future, 7 percent expressed pessimism. Assessments of consumer confidence and demand were both positive and negative.

Expectations for the Colorado economy fell 2.9 points to 51.2. Among the business leaders who responded to the third quarter survey, 31.8 percent expected a moderate increase in the economy. But 21.9 percent anticipated a decrease. Most leaders — 40.8 percent — predicted no change. At either end, 1.5 percent expected a strong increase and 4 percent a strong decrease.

Expectations for the national economy fell 3.2 points to 46.8, the lowest reading among the six components of the index for the third quarter.  While 25.4 percent of business leaders anticipated moderate or strong increases in the national economy, 35.8 percent expected moderate or strong decreases. Most leaders — 38.8 percent — believed there’ll be no change.

Expectations for sales fell 3.2 points, but at 54.7 was the highest of the third quarter readings. While 40.8 percent of leaders expected moderate or strong increases in sales, 22.4 percent anticipated moderate or strong decreases and 36.8 percent forecast no change.

Expectations for profits fell 4.6 points to 52, with 32.4 percent of leaders anticipating moderate or strong increases, 24.9 percent moderate or strong decreases and 42.8 percent no change.

Expectations for hiring fell 2.1 points to 48 with 25.9 percent of leaders forecasting moderate or strong increases in staffing, 29.4 percent moderate or strong layoffs and 44.8 percent no change.

Expectations for capital expenditures fell 1.3 points — the smallest decline between the second and third quarters among the components — to 50.9. While 27.4 percent of leaders expected moderate or strong increases in spending, 22.4 percent anticipated moderate or strong decreases and 50.2 percent forecast no change.

Gross domestic product increased in Colorado at a seasonally adjusted annual rate of 2.3 percent during the first quarter. Personal income in Colorado rose 4.8 percent year-over-year in the first quarter. Nonfarm payrolls increased 55,400 between May 2023 and May 2024. Inflation for the Denver, Aurora and Lakewood area rose at an annual rate of 2.3 percent for the first quarter.