Colorado small business index rises on prospects for global economic rebound

A monthly index tracking conditions for small businesses in Colorado continues to climb on prospects a global economic rebound will boost demand for goods and services from the state.

The Vectra Bank Colorado Small Business Index (SBI) climbed to 103.3 for September, up 1.7 points from a revised 101.6 in August.

With gains in each of the last 12 months, the SBI has climbed more than 32 points to highest level since September 2006, when the index stood at 104.8.

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 component of the index, rose two-tenths to 8.2 percent in August, the estimate for which the September SBI was based. A higher jobless rate actually drives up the SBI because it suggests greater access to labor for small businesses, which typically encounter difficulty in competing against larger firms to recuit and retain workers.

At the same time, the pace of job losses in Colorado has slowed with an estimated decline in nonfrm payrolls of 27,100 over the past year ending in August. That’s slightly lower than the 27,900 jobs lost in the previous year-over-year period.

Jeff Thredgold, an economist who compiles the SBI, said growth in the global economy should bolster the Colorado economy. Thredgold said the International Monetary Fund projects global economic growth at an annual pace of 4.8 percent in 2010, slowing slightly to 4.2 percent in 2011.

The Asian economy is expected to grow at nearly 7 percent next year with China and India leading the way.

Global economic growth should help to increase sales of goods and services from Colorado as well as bolster tourism, Thredgold said. Global economic performance is a component of the SBI.