Colorado business leaders’ optimism has resumed going into the first quarter of 2012 after a dip in confidence last quarter, according to the most recent quarterly Leeds Business Confidence Index, or LBCI, released this week by the University of Colorado Boulder’s Leeds School of Business.
For the first quarter of 2012, the LBCI posted a reading of 54.7, up from 47.3 last quarter. Business leaders are optimistic about all of the metrics measured by the quarterly index, which include industry sales and profits, capital expenditures and hiring plans, and national and state economic growth.
“The first quarter index is much more positive than the fourth quarter index of 2011, and that’s obviously a good thing,” said economist Richard Wobbekind, executive director of the Leeds School’s Business Research Division, who conducts the quarterly survey. “It portends high levels of activity in all categories, including, most importantly, sales and profits and capital expenditures and hiring plans. There’s quite a bit of enthusiasm being exhibited in this survey.”
Hiring and capital expenditures had readings of 52.7 and 52.8 respectively, up from 46.8 and 46.7 last quarter. Thirty percent of respondents said they planned to hire in the coming quarter, and another 45% said they planned to hold steady.
“You put these numbers together and that means that 75% of businesses are either planning to hire or remain stable—they aren’t letting employees go,” Wobbekind said. “I think that’s very bullish in terms of the employment picture.”
Since last quarter, many economic indicators have begun to suggest that the U.S. economy is in a slow, sustained recovery, according to Wobbekind.
“As we see these metrics come in, business people start to feel better about the economy going forward and that there is going to be sustained growth,” he said.
An index reading of 50 is neutral. A reading greater than 50 indicates positive expectations, while one lower than 50 indicates negative expectations.
Overall, business leaders in Colorado believe the state’s economy is in better shape than the national economy, but more importantly, their optimism for the national economy also increased.
The first quarter index measuring the prospects for the state economy rose nearly 10 points from 49.0 to 58.4 in the fourth quarter, while the national index rose more than 10 points from 40.4 to 51.0.
“The national number went from negative to positive in terms of expansion, so our business leaders are suggesting that they believe that the national recovery is sustainable and that’s clearly very important for the Colorado economy,” Wobbekind said.
Business leaders’ sales expectations for the first quarter increased to 58.3 from 51.2 in the fourth quarter, and their profit expectations increased from 49.5 last quarter to 54.7.