The Colorado economy is sending mixed signals with continued growth in production and high levels of labor force participation, but flagging employment growth.

“Businesses continue to indicate a desire and need to hire more workers. But the slow net migration to Colorado has contributed to the sustained worker shortage in the state in 2023,” said Brian Lewandowski, executive director of the business research division at the Leeds School of Business at the University of Colorado at Boulder.

The division recently updated its Colorado Business Economic Outlook report for 2023.

The update cited increases in gross domestic product, the broad measure of goods and services produced in the state. Colorado continued to fare well for high levels of labor participation, annual pay and personal income.

But the update also revised downward projected job growth for the year. Heading into the year, nonfarm payrolls were forecast to increase 57,100 in Colorado. The updated report projected employment growth at 54,400 with gains in nine industry sectors, but losses in two other sectors.

GDP increased at an annual, inflation-adjusted rate of 1.9 percent during the first quarter of 2023. The largest gains were reported for the agriculture, forestry, fishing and hunting; arts, entertainment and recreation; and management of companies and enterprises sectors. The largest losses occurred in the construction and finance and insurance sectors.

Colorado ranked fourth nationally for its labor force participation rate — the proportion of the population either working or actively looking for work.

The state ranked seventh for average annual pay and eighth for per capital personal income.

Colorado fared less well for year-over-year employment growth, ranking 44th in June.

As of July, the latest month for which estimates are available from the Colorado Department of Labor and Employment, nonfarm payrolls grew 38,800 over the past year.

Employment increased 18,000 in leisure and hospitality, 8,900 in professional and business services and 2,800 in health services. Employment decreased 7,100 in financial services, 3,000 in construction and 2,000 in the information sector. Payrolls also decreased 5,400 in the trade, transportation and utilities sector.

The statewide seasonally adjusted unemployment rate rose a tenth of a point. But at 2.9 percent, the latest rate remained below 3 percent for a 15th consecutive month.

In Mesa County, nonfarm payrolls increased 577 over the past year. The seasonally unadjusted jobless rate edged up a tenth of a point to 3.7 percent.

According to the revised forecast for Colorado, the largest employment gains for 2023 are projected for the mining and logging, leisure and hospitality and government sectors. Smaller gains are projected for the education and health services, professional and business services and information sectors. Payrolls are expected to edge up in the construction sector as well as the trade, transportation and utilities sector. Job losses are forecast for the financial activities and manufacturing sectors.

A separate measure of confidence among business leaders calculated by the business research division at the Leeds School of Business reflects concerns about higher interest rates, inflation and housing costs.

Although expectations for a recession moderated, 31 percent of leaders said they believed a downturn could occur in 2023.

The Leeds Business Confidence Index fell a point to 44.1 for the third quarter of 2023. Readings below 50 reflect more negative than positive responses to the survey upon which the index was based. Individual scores for four of six metrics declined. None of the scores topped 50. The outlook remained pessimistic looking ahead to the fourth quarter.