Colorado business leaders’ optimism is rebounding from historic lows, though leaders are still generally pessimistic, according to the latest Leeds Business Confidence Index (LBCI).
The quarterly report, produced by the Leeds Business Research Division at the University of Colorado Boulder's Leeds School of Business, reflects Colorado business leaders’ expectations for the state and national economies, industry sales, industry profits, hiring and business spending. More than 400 business leaders responded to the latest survey, fielded between June 1-19, 2020.
An LBCI score of 50 indicates a neutral outlook. The index is at 44.3 looking ahead to the third quarter of 2020, generally indicating pessimism. However, the LBCI displays a marked improvement over the second quarter LBCI score of 29.7.
“Business leaders are telling us they are optimistic the COVID-19 economic bounce back will occur fairly rapidly,” said Richard Wobbekind, senior economist at the Leeds School of Business. “However, the pessimism we are seeing in business spending and hiring is a cause for concern.”
About 50% of respondents said they expect a decline in capital expenditures, or business investment. Nearly 40% of those surveyed said they expect a decrease in hiring.
All six LBCI components improved in the third quarter, though industry sales was the only category to recover into positive territory with an LBCI score of 51.3.
The national outlook is the most improved from the previous quarter. Respondents gave a higher score to the state economy, indicating they believe Colorado will recover from the COVID-19 downturn more quickly than the rest of the nation.
When asked about the reasons for their response, 52% of panelists cited COVID-19.
Looking ahead to the fourth quarter, respondents shifted a more positive LBCI score of 51.
“The rebound in optimism suggests business owners expect the worst of this downturn is behind us,” Wobbekind said.
The COVID-19 economy
The third quarter LBCI survey asked specific questions about business in the COVID-19 era.
Most respondents (69%) reported declines in sales. A slightly smaller group (58%) expects sales to recover by the second half of 2021.
Colorado business leaders took various employment measures to keep their operations afloat, including pay reductions (40%), furloughs (39%) and layoffs (34%). Roughly a quarter of employers say they are still hiring. Most (70%) said they expect employment to recover between the second half of 2020 and the second half of 2021.