New business filings continue to increase on a year-over-year basis in Colorado, a trend that portends economic recovery in the aftermath of a pandemic.

“Colorado is on the road to recovery despite historic economic challenges,” said Colorado Secretary of State Jena Griswold.

According to the latest report based on statistics from the Colorado Secretary of State’s Office, 39,252 new entity filings were recorded during the second quarter of 2021. 

New filings fell 12.3 percent from the first quarter — a decrease attributed to a seasonal pattern. But compared to the second quarter of 2020, filings were up 25.7 percent.

The business research division of the Leeds School of Business at the University of Colorado at Boulder compiles the report. New entity filings constitute a leading indicator of business and job growth.

Filings for limited liability companies rose 27.4 percent on a year-over-year basis. Filings for domestic corporations increased 19.4 percent. Filings were down 4.2 percent for nonprofit corporations.

For the 12 months ending in the second quarter of 2021, 157,300 new entity filings were recorded. That’s an increase of 26.3 percent over the same span a year ago.

A total of 154,995 renewals for existing entities were recorded in the second quarter of 2021. That’s up 1.7 percent from the second quarter of 2020.

A 2.3 percent increase in renewals for limited liability companies more than offset a 1.6 percent decrease for domestic corporations.

For the 12 months ending in the second quarter of 2021, 627,389 renewals for existing entities were recorded, up 4.7 percent from the same span a year ago.

Dissolution filings also increased in the second quarter of 2021, however, climbing 6.9 percent from the same quarter last year to 9,255. 

For the 12 months ending in the second quarter of 2021, 38,415 dissolution filings were recorded. That’s an increase of 7.9 percent over the same span a year ago.

The overall number of companies, corporations and other entities in operation continues to increase in Colorado. For the second quarter of 2021, there were 830,303 entities in good standing, a 9.6 percent increase over the same quarter last year.

Rich Wobbekind, a senior economist and faculty director of the business research division at the Leeds School of Business, said Colorado continues to recover overall, although at different rates in different regions.

The Colorado Springs and Fort Collins areas lead the state in employment recovery, but other areas lag. 

Over the past 14 months, Colorado has regained 276,400 of the 375,800 jobs lost between February and April 2020 because of the COVID-19 pandemic and related restrictions.

The statewide seasonally adjusted unemployment rate stood at 6.2 percent in  June, the latest month for which estimates are available. That ranks 35th nationally, Wobbekind said. Still, the labor participation rate of 68.5 percent in Colorado ranks third, he said.

“The high participation rate indicates many Coloradans are employed or actively seeking employment. This trend could lead to a full jobs recovery from the recession in 2022,” Wobbekind said.

Gross domestic product, the broad measure of goods and services produced in the state, grew 1.4 percent year over year.

A separate index based on a quarterly survey of Colorado business leaders also signals a more upbeat outlook, Wobbekind said. The Leeds Business Confidence Index rose 2.9 points to 67.3 for the third quarter.  Readings above 50 reflect  more positive than negative responses. The index was 23 points lower at 44.3 in the midst of the pandemic a year ago.

Challenges remain, however, Griswold said. “While the latest data is encouraging, we know that the pandemic has deepened wealth and income inequality in our state, and many Coloradans have not see a return to pre-pandemic normal. As we continue to rebuild from the pandemic, there is incredible opportunity to ensure that Colorado’s strengthening economy is benefiting all communities.”