A monthly measure of economic conditions for small businesses in Colorado has retreated, although somewhat faster growth nationally could help.
“Any improvement in what has been to date meager U.S. economic growth would pay dividends for Colorado’s small business sector,” said Jeff Thredgold, a corporate economist who calculates the Vectra Bank Colorado Small Business Index (SBI).
The SBI slipped to 114.3 in October, down a half point from a revised 114.8 in September. The latest reading remains more than seven points below the 121.7 posted in March, but nearly 11 points above the 103.6 posted in October 2010.
The SBI tracks conditions from the perspective of a small business owner or manager. Lower numbers reflect less favorable conditions.
The statewide seasonally adjusted unemployment rate, the most heavily weighted component of the index, dipped two-tenths of a point to 8.3 percent in September, the month for which the October SBI was based. A lower jobless rate actually pushes up the index because it suggests less access to labor for small businesses, which typically encounter difficulty competing against larger firms to recruit and retrain employees.
At the same time, though, the pace of job growth accelerated with an increase in nonfarm payrolls of 23,100 over the year ending in September. That compares to a revised gain of 20,900 jobs in the prior year-over-year period. Job gains push up the SBI because they lead to greater income creation and retail spending.
Thredgold said gross domestic product, the broad measure of goods and services produced in the country, grew at an annual rate of 2.5 percent during the third quarter. That exceeded 1.3 percent GDP growth in the second quarter and only 0.4 percent growth in the first quarter.
Forecasts of slow to moderate growth counter concerns the U.S. economy could return to recession, he said.
Personal consumption rose at an annual rate of 2.4 percent during the third quarter, Thredgold said. Businesses spending on equipment and computer software rose 17.4 percent, the strongest pace in a year.
Nonfarm payrolls grew an estimated 80,000 in October, while initial estimates for job gains in September and August were revised upward a total of 102,000.
U.S. economic performance is a component of the SBI.