The Vectra Bank Colorado Small Business Index for Colorado registered 87.6 in August, up from a revised 87.3 in July, according to data released Thursday.
“Colorado continues to outperform much of the rest of the nation in terms of job growth,” Jeff Thredgold, corporate economist for Vectra Bank Colorado, said in a statement. “The state’s latest 1.3 percent year-over-year growth rate would normally be nothing to write home about. But considering the U.S. economic struggles of the past year, Colorado’s employment performance is notable.”
Colorado’s unemployment rate was estimated at 5.2 percent in July, up from 5.1 percent in June and 3.8 percent a year ago, according to the state Department of Labor and Employment. Total employment has risen by 31,400 jobs during the past 12 months.
The unemployment rate is the most heavily weighted component of the index. A higher Colorado jobless rate is a positive contributor, as it suggests greater access to labor for small businesses.
The U.S. economy lost an estimated 84,000 net jobs in August, and the U.S. unemployment rate rose to a five-year high of 6.1 percent.
If the economy grows faster than expected, the Federal Reserve could raise a key short-term interest rate target by the end of the year. But if the economic outlook worsens or the credit markets freeze up again, as they did in late 2007, the Fed could cut rates again.
The Colorado Small Business Index assumes that most small businesses are net borrowers of operating funds. As a result, higher short-term interest rates would be a negative development for many small businesses, while lower financing costs would help.
The index measures business conditions from the viewpoint of the Colorado small business owner or manager. A higher number is associated with more favorable business “conditions” for Colorado’s small businesses. The index uses 100.0 for calendar year 1997 as its base year.
The U.S. Small Business Index rose slightly in August to 71.1 from the revised number of 70.1 in July.
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