State businesses are confident they can grow this quarter despite ambiguous signals from the national economy, according to the latest survey from the University of Colorado’s Leeds School of Business.
The Leeds Business Confidence Index rose to 54.8 for the third quarter of 2010, its highest level in three years. The index pierced the “neutral” rating last quarter to reach 51.7 after staying negative for the previous 11 quarters.
Most of the 268 firms that responded also reported more positive outlooks for sales, profits, hiring and capital expenditures in their businesses.
“I think they see a general tone of optimism,” said Richard Wobbekind, director of the Leeds School’s Business Research Division.
Confidence in the national economy was the only survey metric that fell, showing that some Colorado businesses see trouble in the country’s private sector even as their own sales look ready to rebound.
Sales are the driving force behind companies’ ability to afford new capital expenditures, make profits and hire new people, Wobbekind said. Industry sales expectations for this quarter reached 59.4, also the highest level since the same time in 2007.
Plans for capital expenditures and hiring swung positive for the first time since 2007 to 53.7 and 53.3, respectively. Confidence in the state economy rose to 56.1, its highest since 2006.
“I don’t think anyone’s going to believe the recovery’s been in place until we see better hiring numbers locally and nationally,” Wobbekind said. “If they’re saying they’re hiring, you have to think they’re telling us the truth.”
At the same time, headlines from New York and Washington add to state businesses’ uncertainty. Markets reacted negatively Wednesday after minutes released from a June meeting of Federal Reserve officials showed lowered expectations for the overall economy.
Some Colorado firms share their out-of-state counterparts’ pessimism. Manufacturers continue to struggle, Wobbekind said, even as white-collar professional business services say they’re ready to hire.
The state’s small businesses are also less confident than large firms that their sales will rise, said Tony Gagliardi, Colorado director of the National Federation of Independent Business.
“We keep talking about access to capital for small businesses,” Gagliardi said. “When I talk to my members in manufacturing, they are not expanding. They are not going to borrow, because they don’t have customers coming through the door.”
The NFIB’s monthly Small Business Economic Trends survey found optimism among its nationwide membership last month.
Drew FitzGerald: 303-954-1381 or dfitzgerald@denverpost.com
