Published: Sept. 30, 2016 By

Several flags -- CU's, the state of Colorado's and the United State's -- are raised near the Colorado state capitol.Though remaining in positive territory, the optimism of Colorado business leaders is projected to dip slightly in the fourth quarter of 2016. It then is expected to increase during the first quarter of 2017, according to a University of Colorado Boulder report by the Leeds School of Business.

Released today, the Leeds Business Confidence Index shows an overall reading of 53 points entering the fourth quarter, down by 1.6 points ahead of the third quarter of 2016. An overall confidence reading of 53.2 points in the index is recorded for the first quarter of 2017.

Compared with one year ago, fourth quarter expectations have fallen by five-tenths of a point and first quarter expectations have fallen by 2.2 points.

The upcoming presidential election is causing some of the uncertainty captured in the index, said economist Richard Wobbekind, executive director of the Leeds School’s Business Research Division, which conducts the index via panelist responses to a survey. 

Sector-by-sector highlights heading into the fourth quarter of 2016:
  • State economy confidence is essentially flat at 57.5 compared with 57.4 ahead of the third quarter;
  • National economy confidence is higher at 48.2 compared with 47.2 ahead of the third quarter; it’s projected at 51.5 in the first quarter of 2017;
  • Profits confidence is sharply down at 52.2 compared with 56.9 ahead of the third quarter;
  • Sales confidence is down at 55.3 compared with 58.6 ahead of the third quarter;
  • Capital expenditures confidence is down at 51.7 compared with 54.4 ahead of the third quarter;
  • Hiring confidence is slightly down at 53.2 compared with 53.4 ahead of the third quarter.

“The candidates support different policies and maybe even approaches beyond policies,” Wobbekind said. “So the business community seems to be taking a wait-and-see approach.”

Other top areas of concern expressed in the index are government regulation and the workforce.

The 270 panelists, however, felt most optimistic about the state economy and industry sales, according to the index.

Also a bright spot, expectations for the national economy are projected to reenter positive territory in the first quarter of 2017. This is the first positive reading for the national economy since the fourth quarter of 2015, according to the index.

The index measures business confidence – with 50 points or higher representing positive territory – in the state economy, industry sales, industry profits, capital expenditures, hiring plans and the national economy. With the exception of expectations for the national economy, the current readings represent 21 consecutive quarters of positive expectations, according to the index. 

    Colorado’s unemployment level, which remains lower than the national level, increased to 3.8 percent in August. The state rate compares with a national unemployment rate in August of 4.9 percent.

    Year-over-year employment growth in August is recorded for six of Colorado’s seven metropolitan statistical areas (MSAs). The Denver-Aurora-Lakewood and Fort Collins-Loveland MSAs show the fastest growth at 3.3 percent and 3 percent, respectively. The Colorado Springs MSA is at the lowest end of growth at 1.7 percent and the Grand Junction MSA is flat.

    Statewide the biggest employment gains as of August 2016 compared with August 2015 are in the construction (11.3 percent), leisure and hospitality (5.3 percent) and education and health services (3.4 percent) sectors.

    Visit the Leeds School’s Business Research Division page for the fourth quarter report and more information.