An index tracking conditions for small businesses in Colorado has declined for a third straight month as slowing growth in the global and national economies affect prospects in the state.
“Most Colorado economic growth will have to be self-generated for the meantime as the global and U.S. economies are slowing,” said Jeff Thredgold, a corporate economist who calculates the Vectra Bank Colorado Small Business Index (SBI).
The index slipped to 116.8 in June, down six-tenths from a revised 117.4 for May. With losses in each of the last three months, the index has dropped to its lowest level since it stood at 112.8 in January.
The SBI tracks economic conditions from the perspective of a small business owner or manager. Lower numbers reflect generally less favorable conditions.
The statewide seasonally adjusted unemployment rate, the most heavily weighted of 14 components of the index, edged down a tenth to 8.7 percent in May, the month upon which the June SBI was based. A lower jobless rate actually pulls down the index because it suggests less access to labor for small businesses, which typically encounter difficulty in competing against larger firms to recruit and retain employees.
At the same time, though, the pace of job growth increased slightly in May with an estimated addition of 7,700 net new jobs over the past year. That compares to a revised gain of 7,200 jobs in the previous year-over-year period. Job growth, income gains and the resulting increase in retail sales pull the SBI higher.
Meanwhile, global and national economic growth has slowed, Thredgold said, in turn driving down the index.
China, India, Japan and the U.S. all have experienced economic slowing in recent months as energy and food costs have increased and uncertainty mounts over the possible default of national debt in Europe.
In the U.S., nonfarm payrolls grew by a meager 18,000 in June, according to initial Labor Department estimates. The national unemployment rate edged up a tenth to 9.2 percent, the highest level in six months.
While the U.S. economy added an average of 215,000 jobs a month between February and April, job growth remained nearly flat for May and June.
Nonetheless, the Vectra Bank U.S. Small Business Index advanced more than a point to 116.9 in June.