An increase in new business filings in Colorado bodes well for continued economic growth — as well as an indication slowing job growth reflects labor shortages.

“The growth in establishments and strong underlying components of the labor market suggest the slowdown in job growth appears to be a labor supply issue rather than a signal of business distress,” said Brian Lewandowski, executive director of the business research division at the Leeds School of Business at the University of Colorado at Boulder.

The division tracks quarterly business and economic indicators based in part of filings recorded with the Colorado secretary of state’s office.

For the second quarter of 2023, the secretary of state’s office recorded 54,890 new entity filings. That was a decrease from a record first quarter, but also a 39.1 percent increase over the second quarter of 2022.

New filings constitute a leading indicator of subsequent business and job growth.

“Colorado’s continued growth is a positive sign for our economy, our businesses and our workers,” said Colorado Secretary of State Jena Griswold. “We must continue to capitalize on Colorado’s strong business environment and work to ensure Colorado remains one of the most business-friendly states in the nation.”

Of the new entity filings for the second quarter, 47,272 were for domestic limited liability companies. Another 3,295 were for domestic corporations and 979 for nonprofit corporations.

Over the past year ending in the second quarter, 203,145 new entity filings were recorded. That’s a increase over the first quarter as well as 29.5 percent gain over the same period a year ago.

A total of 171,081 existing entity renewals were recorded for the second quarter of 2023. That’s down six-tenths of a percent from the second quarter of 2022.

For the year ending in the second quarter, 700,160 entity renewals were recorded. That’s a 1.1 percent increase over the same span a year ago.

However, dissolution filings also edged up on a year-over-year basis, climbing three-tenths of a percent to 11,785 in the second quarter. For the year ending in the second quarter, 50,694 dissolution filings were recorded. That’s up 12.4 percent over the same period a year ago.

A total of 945,849 entities were in good standing in Colorado as of the second quarter of 2023, up 9 percent from a year ago.

Lewandowski said inflation continued to relent. The Consumer Price Index for the Denver, Aurora and Lakewood metropolitan area was up 5.1 percent in May compared to the same month a year ago.

Growth continued in gross domestic product, personal income and retail sales, but at a slower pace, he said.

For July, nonfarm payrolls in Colorado increased 38,800 over the past year, a gain of 1.4 percent that lagged behind national job growth of 2.2 percent.

But with a statewide seasonally adjusted unemployment rate holding below 3 percent for 15 consecutive months, slow job growth appears to be a result of labor shortages rather than a softening labor demand, Lewandowski said.