Vectra Bank’s Small Business Index for Colorado measured 113.2 for February, up from a revised 112.8 in January. Improving employment data accounted for the slight uptick.
Colorado’s unemployment rate – the most heavily weighted component of the index – was estimated at 8.8 percent in the most recent month, unchanged from the prior month. Twelve months ago, the rate was 7.4 percent.
Because a higher unemployment rate suggests increased access to labor for small businesses, it increases the index. Other factors typical of a higher unemployment rate, however, such as less job creation, less income gains and lower retail sales, decrease the business index.
By way of comparison, the state’s unemployment rate averaged 8 percent last year, 7.7 percent during 2009, 4.9 percent in 2008, 3.9 percent in 2007, and 4.4 percent in 2006. Between 1990 and 2005, Colorado’s unemployment rate averaged 4.6 percent.
“A return of much stronger U.S. job gains in coming months will bode well for Colorado’s small business sector,” said Jeff Thredgold, corporate economist for Vectra.
During the past 12 months, the state added 5,200 jobs. However, the state lost 50,000 jobs in 2010, lost 106,300 jobs in 2009, added 19,000 jobs in 2008, added 52,200 jobs in 2007, and added 53,100 jobs in 2006.
Nationally, the private sector added 222,000 net new jobs last month, while state and local government employment declined by 30,000 jobs.
Thredgold said that private companies are likely to continue adding jobs at more impressive rates than during the past two years. Meanwhile, corporate profit levels have risen significantly, he said, while productivity gains tied to solid investments in technology have largely run their course.
Since employment peaked in September 2008, state and local governments across the nation have eliminated 377,000 jobs. Employment in this sector will continue to decline, because of decreases in state and local tax revenue, Thredgold said.
With assets of $2.3 billion, Vectra Bank Colorado is part of Zions Bancorporation, and serves the small-, middle-market and corporate sectors, with 39 locations throughout the state.