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January 12-25, 2023 The Business Times News Page 19 Trends Contributors Shaken, not stirred Opinion Latest survey of Colorado business leaders reflects slowing economy Phil Castle Business Times Business Briefs Colorado business leaders remain more shaken than stirred heading into the new year, according to the latest results of a quarterly survey.

Business PeopleIt remains to be seen whether or not the economy officially will slip into recession, but any growth likely will come at a snail’s pace, Almanac said Rich Wobbekind, a senior economist and faculty director of the business research division of the Leeds School of Business at the University of Colorado at Boulder. “It’s gonna be a really slow economy.” The Leeds Business Confidence Index remained unchanged at 39.8 for the first quarter. That ties the fourth-lowest reading in the 20-year history of an index the division bases on surveys of business leaders across Colorado and industry sectors. Looking ahead to the second quarter, the reading was slightly more upbeat at 43.2 Still, readings below 50 reflect more negative than positive responses. Individual scores for two of six metrics the index tracks increased between the fourth and first quarters with improving expectations for the state and national economies. Scores for the other four indicators decreased on less upbeat expectations for hiring, capital expenditures, sales and profits. All six scores remained below 50. While leaders base their expectations for the state and national economies on external factors, Wobbekind said they base their expectations of other conditions on internal factors that inform them their businesses are slowing. Inflation, higher interest rates and uncertainty also affect the outlook, he said. Colorado continues to outperform other areas of the United States, Wobbekind said, especially in terms of personal income and the production of goods and services. Job growth continues as well, he said. Colorado payrolls increased 103,400 between November 2021 and November 2022, the latest span for which estimates are available. All seven

INDICATORS AT A GLANCE

n Business filings s New business filings in Colorado, 43,657 in the third quarter, up 14.5 percent from the third quarter of 2021. metropolitan statistical areas in Colorado posted year-over-year n Confidence job growth, including a nearly 1.6 percent gain in Mesa County. s Consumer Confidence Index 108.3 for December, up 6.9. n Leeds Business Confidence Index for Colorado, 39.8 for the first quarter, unchanged. Employment growth is expected to slow in 2023, however, with a projected increase of 57,000 jobs, he said. Inflation poses the biggest concern for business leaders, with the rate for the Denver, Aurora and Lakewood area expected to hit 4.5 percent this year, he said. t National Federation of Independent Business Small Business Optimism Index Among the 143 leaders who responded to the December survey upon which the first quarter index was based, nearly 58 percent expected the U.S. to enter a recession in the first half of 2023 even 89.8 for December, down 2.1. as 21.6 percent believed a recession remained very unlikely. n Foreclosures Expectations for the Colorado economy for the first quarter rose 1.8 points to 41.8 with 49 percent of respondents predicting s Foreclosure filings in moderate or strong decreases and 19.6 percent anticipating Mesa County, 14 in moderate or strong increases. Another 31.5 percent forecast no December, up from 2 in December 2021. Rich Wobbekind change. Expectations for the national economy rose 3.7 points, but t Foreclosure sales in remained the lowest of the six components at 34.4. While 64.3 percent Mesa County, 1 in of respondents anticipated moderate or strong decreases, 21.7 percent December, down from 3 in expected no change and 14 percent forecast a moderate increase. December 2021. The reading was highest for hiring at 42.1 despite a 1.2 point n Indexes t Conference Board Employment Trends Index, 116.31 for December, down 0.83. t Conference Board Leading Economic Index 113.5 for November, down 1%. drop from the fourth quarter. For the first quarter, 42 percent of respondents anticipated no changes in staffing, a total of 39.9 percent expected moderate or strong decreases and a total of 18.2 percent predicted moderate or strong increases. Expectations for capital expenditures fell 1.1 points to 39.7. A total of 46.2 percent of respondents forecast moderate or strong decreases. Another 36.4 percent expected no change and a total of t Institute for Supply Management Purchasing Managers Index 17.5 percent anticipated moderate or strong increases. The score for sales fell 1.3 points to 42.2 with a total of for manufacturing, 48.4% for 51.1 percent of respondents forecasting moderate or strong December, down 0.6%. decreases, 28.7 percent no change and a total of 20.3 percent n Lodging moderate or strong increases. Expectations for profits fell two points to 39.7 with 51.1 percent s Lodging tax collections in of respondents anticipating moderate or strong decreases, Grand Junction, $489,521 30.8 percent no change and a total of 18.2 percent moderate or for November, up 35.2% strong increases. from November 2021. F n Real estate

t Real estate transactions in Mesa County, 271 in December, down 51.8% from December 2021. t Dollar volume of real estate transactions in Mesa County, $141.6 million in December, down 44.7% from December 2021. n Sales

s Sales and use tax collections in Grand Junction, $6.1 million for November, up 5.7% from November 2021. s Sales and use tax collections in Mesa County, $4.5 million for November, up 6.7% from November 2021. n Unemployment

t Mesa County — 3.6% for November, down 0.2.

Small Business Optimism Index declines

A measure of optimism among small business owners has declined on less upbeat expectations for the economy, sales and earnings.

“Overall, small business owners are not optimistic about 2023 as sales and business conditions are expected to deteriorate,” said Bill Dunkelberg, chief economist of the National Federation of Independent Business.

The NFIB reported its Small Business Optimism Index retreated 2.1 points to 89.8 in December. The index has remained below the 49-year average of 98 for 12 consecutive months. Bill Dunkelberg

“Owners are managing several economic uncertainties and persistent inflation, and they continue to make business and operational changes to compensate,” Dunkelberg said. The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners. For December, eight of 10 components of the index declined.

The proportion of NFIB members responding to the survey upon which the December index was based who expected the economy to improve fell eight points. At a net negative 51 percent, more members anticipated worsening conditions.

A net 23 percent reported plans for capital outlays, down a point from November. A net 5 percent said they consider now a good time to expand, also down a point.

The share of those who expected increased sales fell two points. At a net negative 10 percent, more forecast decreased sales.

Expectations for profits declined eight points to a net negative 30 percent. Among those reporting lower profits, 30 percent cited higher material costs and 24 percent blamed weaker sales.

A net 17 percent of survey respondents reported plans to increase staffing, down a point. A net 41 percent cited unfilled job penings, down three points.

The proportion of respondents planning to increase inventories remained unchanged at a net negative 4 percent. A net 1 percent said existing inventories were too low, up three points.

Asked to identify their single most important business problem, 32 percent cited inflation, up 10 points from a year ago.

Still, the proportion of respondents reporting raising average selling prices dropped eight points to a net 43 percent. That’s the lowest level since May 2021. Price hikes were most frequent in the wholesale, manufacturing and construction sectors. F

The Business Times U.S. payrolls up, jobless rate down

A year of ups and downs in the U.S. labor market ended with payrolls up and the monthly unemployment rate down.

Nonfarm payrolls increased 223,000 in December as the jobless rate edged down a tenth of a point to 3.5 percent, according to the latest estimates from the U.S. Bureau of Labor Statistics.

The payroll gain fell short of the monthly average for 2022. But the jobless rate matched a 53-year low.

The payroll gain for November was revised down 7,000 to 256,000, while the gain for October was revised down 21,000 to 263,000.

For all of 2022, payroll employment rose 4.5 million, less than the 6.7 million increase in 2021. Payrolls increased an average of 375,000 a month in 2022.

For December, 5.7 million people were counted among those unsuccessfully looking for work. Of those, 1.1 million have been out of work 27 weeks or longer. Another 3.9 million people were counted among those working part-time because their hours were cut or they were unable to find full-time positions.

The labor participation rate edged up two-tenths of a point to 62.3 percent, but remained below the rate before the onset of the COVID-19 pandemic in the U.S. in early 2020.

Payroll gains for December were spread out among industry sectors. Employment increased 67,000 in leisure and hospitality, 55,000 in health care, 28,000 in construction and 20,000 in social assistance. Gains were smaller at 9,000 for retail trades, 8,000 for manufacturing and 5,000 in transportation and warehousing. Government payrolls rose 3,000.

The average workweek shortened a tenth of an hour to 34.3 hours, The average manufacturing work week was little changed at 40.1 hours.

Average hourly earnings rose 9 cents to $32.82. Over the past year, hourly earnings increased 4.6 percent.

Labor index signals slowing

A monthly index tracking labor trends declined for a third consecutive month, signaling slowing in job growth in the months ahead.

The Conference Board reported its Employment Trends Index slipped more than eight-tenths of a point to 116.31 in December. Seven of eight components of the index declined. F

F

Consumer Confidence Index rebounds

A measure of consumer confidence has rebounded to it highest level in eight months on more upbeat assessments of business and labor conditions.

The Conference board reported its Consumer Confidence Index rose 6.9 points to 108.3 in December. The gain reversed two months of declines to reach the highest reading since April.

Measures of current conditions and shortterm expectations both increased.

Lynn Franco, senior director of economic indicators at the Conference Board, said consumers were more optimistic about the Lynn Francoeconomy and jobs. Expectations for inflation retreated to their lowest level since September 2021 as gasoline prices declined. Consumers indicated they were more willing to take vacations, but less likely to purchase homes and appliances,.

“The shift in consumer preferences from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes,” she said.

A think tank based in New York, the Conference Board bases the Consumer Confidence Index on the results of monthly household surveys.

More upbeat assessments of current conditions pushed up the present situation component of the index 8.9 points to 147.2.

The proportion of consumers responding to the survey upon which the December index was based who described business conditions as “good” rose 1.2 points to 19 percent. The share of those who said conditions were “bad” fell 3.5 points to 20.1 percent.

The proportion of respondents who said jobs were “plentiful” rose 2.6 points to 47.8 percent. The share of those who said jobs were “hard to get” fell 1.7 points to 12 percent.

More optimistic outlooks pushed up the expectations component of the index 5.7 points. But at 82.4, the reading lingered near a level associated with recession.

The share of consumers who said they expected business conditions to improve over the next six months rose six-tenths of a point to 20.4 percent. The proportion of those who said they anticipated worsening conditions fell seven-tenths of a point to 20.3 percent.

The share of those who said they expected more jobs to become available rose a point to 19.5 percent. The proportion of those who forecast fewer jobs fell 2.9 points to 18.3 percent.

While 16.7 percent of consumers responding to the survey said they expected their incomes to increase, 13.3 percent said they expected their incomes to decrease. F

January 12-25, 2023 Leading index still signaling U.S. recession

An index forecasting economic conditions in the United States continues to decline, signaling a recession that could start early this year.

The Conference Board reported its Leading Economic Index fell 1 percent to 113.5 in November. The index has dropped in each of the last nine months and 3.7 percent over the past six months.

Separate measures of current and past conditions increased in November.

Ataman Ozyildirim, the senior director of economics at the Conference Board, said the latest readings reflect headwinds to U.S. economic growth. “The Federal Reserve’s monetary tightening cycle is curtailing aspects of economic activity, especially housing,” Ozyildirim said. “As a result, we project the U.S. recession is likely to start around the beginning of 2023 and last through mid-year.”

For November, six of 10 components of the Leading Economic Index retreated, including average weekly manufacturing hours, building permits, consumer expectations and leading credit and new orders indexes. An increase in weekly initial claims for unemployment benefits also pulled down the index. The interest rate spread, new orders for capital and consumer goods and stock prices advanced.

The Coincident Economic Index, a measure of current conditions, edged up a tenth of a percent to 109.4. The index rose 1.2 percent over the past six months.

For November, three of four indicators increased: nonfarm payrolls, personal income and sales. Industrial production declined.

The Lagging Economic Index, a measure of past performance, rose two-tenths of a percent to 116.4. The index rose nine-tenths of a point over the past three months.

For November, three of seven components advanced: the average prime rate charged by banks, commercial and industrial financing and consumer credit. The change in labor costs and services pulled down the index, as did an increase in the duration of unemployment. Inventories remained unchanged.

Ataman Ozyildirim