Leeds Business Confidence Index (LBCI), Q2 2013
The Leeds Business Confidence Index (LBCI) is a forward-looking index that gauges business leaders’ opinions about national and state economic trends and how their industry will perform in the coming quarter.
Confidence surged going into Q2 as uncertainty eased and the economy demonstrated a more stable footing. Now in its 10th year, the Leeds Business Confidence Index (LBCI) measures the confidence of Colorado business leaders in six categories: national economy, state economy, industry sales, industry profits, hiring plans, and capital expenditures. The LBCI increased sharply, from 51.3 in Q1 2013 to 58.1 in Q2 2013.
Expectations measured positive (above 50) for all metrics, including the national economy and industry hiring plans, which were negative one quarter ago. Hiring expectations marked the greatest quarterly improvement, followed by sales and profits expectations. While the outlook for the state and the nation both improved for the quarter, the ongoing differential between the state and the nation increased in Q2, to 11.6, indicating that Colorado business leaders still have greater confidence in the local economy than the national economy.
After confidence teetered in Q1 in conjunction with the fiscal cliff, the Q2 index reading makes six consecutive quarters of positive expectations. As the economy heads into second quarter, month-over-month employment is recording moderate growth and jobless claims continue to fall, demonstrating stronger footing in the labor market. While GDP in Q4 2012 was weak, expectations still point to improving growth in 2013 and 2014. Economic risks include the drag of cuts in federal spending and the European debt crisis, although respondents indicated these concerns are subordinate to consumer confidence and tax policy. The debt ceiling debate will likely be pushed to September 2013, reducing the immediate threat to the economy, and the Federal Reserve demonstrated in March its continued commitment to current policy.