More jobs boost index but tighten labor market

James Paton, Rocky Mountain News

Friday, May 12, 2006

The prospects of small-business owners across Colorado improved slightly last month because of global economic gains, but a lower jobless rate means it is harder to find workers, a new report shows.

The Vectra Bank Colorado Small Business Index inched higher to 103.1 in April from a revised 103.0 in March, said economist Jeff Thredgold, who compiles the data.

More jobs generate more income and higher levels of spending, giving a boost to the small-business index.

Colorado is on pace to add more than 50,000 jobs this year after increases of 45,900 in 2005 and 26,800 in 2004 and shedding roughly 75,000 jobs in 2002 and 2003.

Despite the gains in recent years, Colorado is well off the average annual gains of 77,000 jobs during the 1993-2000 period, the report stated.

While more jobs and income fuel the index on one hand, a low jobless rate has a negative effect because small businesses in theory will have a more difficult time filling positions with qualified workers.

"A return to tighter Colorado labor markets seems to be unfolding," Thredgold said.

Colorado's unemployment rate was 4.3 percent in the latest month, unchanged from the prior month and "sharply lower than it has been from some time," Thredgold wrote.

The index, which uses 100.0 as a baseline, has dipped from levels seen earlier in 2006.

Thredgold said a stronger worldwide economy coupled with a weaker dollar make Colorado products cheaper abroad and travel to the state more attractive.

"Continued strong global economic performance, in particular, benefits large and small businesses across the nation, including those in Colorado," he added.

patonj@RockyMountainNews.com or 303-892-2544