A monthly measure of economic conditions for small businesses in Colorado continues to edge upward, although flagging consumer confidence hinders bigger gains.
“The most significant challenge facing the Colorado economy today is that it is part of a struggling national economy,” said Jeff Thredgold, a corporate economist who calculates the Vectra Bank Colorado Small Business Index (SBI).
For September, the SBI rose four-tenths to 114.3. The index remains more than seven points below the reading of 121.7 posted in March. At this time last year, however, the index was far lower at 102.9.
The SBI tracks conditions from the perspective of a small business owner or manager. Higher numbers reflect more favorable conditions.
The statewide seasonally adjusted unemployment rate, the most heavily weighted of 14 components of the index, remained unchanged at 8.5 percent in August, the month upon which the September SBI was based.
The pace of job growth accelerated slightly, though, with an estimated addition of 16,400 jobs to nonfarm payrolls in Colorado over the year ending in August. That compares to a revised gain of 16,200 jobs in the previous year-over-year period. Job growth, income gains and the resulting increase in retail sales help small businesses and push up the SBI.
Thredgold said the low confidence levels of consumers and business managers have contributed to slow recovery in the United States in the aftermath of the recession. Less confident consumers spend less, while less confident business managers remain reluctant to increase staffing.
Thredgold attributed the situation in part to investor anxiety about sovereign debt problems in Europe and uncertainty over federal government policies and budget deficits in the United States. Rising confidence in the U.S. and the region would benefit small businesses in Colorado, he said.
Stronger than expected job gains in the U.S. could help bolster confidence, he said. Nonfarm payrolls grew an estimated 103,000 in September, while initial employment estimates for August and July were revised upward a total of 99,000. The gains weren’t enough to budge the jobless rate, though, which remained at 9.1 percent a third straight month.
Action to address high debt levels in Europe and cut U.S. budget deficits would help as well, he added.