Leeds index: Business confidence wanes slightly

Colorado business leaders remained confident, although generally less optimistic about the economy looking ahead to the third quarter, according to the most recent quarterly Leeds Business Confidence Index, or LBCI, released last week by the University of Colorado Boulder's Leeds School of Business.

For the third quarter of 2011, the LBCI posted a reading of 51.6, down from 56.8 in the second quarter. Confidence waned across all indices, although most remained above the neutral mark of 50.

Expectations for the national economy were once again especially bleak, falling back below neutral after two consecutive quarters of optimism, according to Leeds School economist and Business Research Division Executive Director Richard Wobbekind, who conducts the quarterly survey.

"The overall economy has been damaged by uncertainty – the uncertainty of consumers about the strength of the recovery and the strength of the job market and the uncertainty of businesses about demand for their products – and I think that uncertainty has worked its way into our index and other national indexes," Wobbekind said.
An index reading of 50 is neutral. A reading greater than 50 indicates positive expectations, while an index lower than 50 indicates negative expectations, according to Leeds School researcher Brian Lewandowski, who compiles the survey results for the index.

"I think our business leaders want to see some of their concerns such as the international debt issues, higher oil prices and other uncertainties get worked out, and fortunately right now some of these things are getting worked out," Wobbekind said. "They're backpedaling a little bit and they're not quite as confident, but overall they have a decent level of confidence."

Confidence turned negative for the national economy, decreasing nearly 10 points from 53.6 to 44.0, while the state index fell from 55.5 to 51.2.

Capital expenditures had an index reading of 53.4, down from 56.1 last quarter. The sales and profit expectations of business leaders are positive, but subdued, according to Lewandowski. The sales index was 55.8, and the profit index was 53.1.

To access the complete report visit http://leeds.colorado.edu/publication/237. To view a short video of Wobbekind discussing the index visit http://www.colorado.edu/news and click on the Leeds Business Confidence Index story.