A monthly index tracking conditions for small businesses in Colorado continues to rise, although slow national economic growth isn’t likely to bolster the state recovery.
“Colorado’s expected return to modest economic growth in coming months won’t get much help from a soft U.S. economy,” said Jeff Thredgold, a corporate economist who calculates the Vectra Bank Colorado Small Business Index (SBI).
The SBI advanced to 103.2 in October, up three-tenths from a revised 102.9 in September. With gains in each of the last 13 months, the SBI has climbed to its highest level since hitting 104.8 in September 2006. At this time last year, the index stood at 72.2.
The SBI tracks economic conditions from the perspective of a small business owner or manager. Higher readings are associated with generally more favorable conditions.
The statewide seasonally adjusted unemployment rate, the most heavily weighted of 14 components of the index, edged up a tenth to 8.2 percent in September, the month for which the October SBI was based. A higher jobless rate actually pushes up the index because it suggests greater access to labor for small businesses, which typically encounter difficulty in competing against larger firms to recruit and retain employees.
At the same time, the pace of job losses in Colorado has slowed. For the 12 months ending in September, nonfarm payrolls declined 23,800. That compares to a revised loss of 25,500 jobs in the previous year-over-year period.
For October, the statewide seasonally adjusted unemployment rate rose two-tenths to 8.4 percent. For the 12 months ending in October, nonfarm payrolls declined 12,600.
The national economy plays a role in the Colorado economy and, consequently, affects the SBI.
The U.S. SBI jumped nearly two points in October to 113.3, although the latest estimates for growth in gross domestic product reflect weak performance, Thredgold said.
The GDP, the broad measure of goods and services produces in the country, grew at an annual rate of 2.5 percent in the third quarter. That’s only slightly higher than the 1.7 percent annual growth rate for the second quarter. Those numbers are roughly half the average annual GDP growth rate of 3.6 percent over the past 30 years.
Thredgold said he expects annual GDP growth of 2 percent to 3 percent as the U.S. continues to struggling following the worst economic downturn in 80 years.
Nonfarm U.S. payrolls grew by an estimated 151,000 in October — more than expected, but not enough to bring down the national unemployment rate, which was unchanged at 9.6 percent.