New business filings reached a 10-year high and continued to show year-over-year growth in the second quarter of 2017, raising future employment expectations in Colorado.
That’s according to a University of Colorado Boulder report released Thursday by Colorado Secretary of State Wayne Williams.
The report, prepared by CU Boulder’s Business Research Division at the Leeds School of Business, used data from the secretary of state’s business registry. It examined a variety of metrics, including new business filings, business renewals, construction and the unemployment rate, both in Colorado and nationally.
“It’s a little stronger than I thought it would be,” said Richard Wobbekind, executive director of the Business Research Division.
He said that business filings are a strong indicator of overall economic strength in Colorado.
“There is a pretty high correlation,” Wobbekind said. “New entity filings are capturing the entrepreneurial activity in the state. Those [startups] become the small businesses the state is known for.”
Based on data from the Bureau of Labor Statistics, differences in employment growth between the urban and rural parts of the state are noted. Job growth in communities outside of the metropolitan statistical areas is lagging. However, most of the state’s economic indicators showed strong growth year-over-year in the second quarter, and Colorado is expected to continue to add jobs throughout 2017. Total new entity filings increased 5.9 percent year-over-year while decreasing 8.4 percent compared to last quarter, indicative of normal seasonal slowdown.
“New entity filing continued an upward trajectory, which is good news for our state,” Williams said. “There are now nearly 650,000 business entities in good standing filed with our office.”
Over the 12 months ending in the second quarter of 2017, a total of 113,949 new business filings were recorded, which bodes well for future job growth in the state. Entities in good standing reached 647,246 in the second quarter, an increase of 6.1 percent year-over-year.
That means more jobs, said Mike Hardin, business and licensing division director for Colorado, who works out of the secretary of state’s office.
“As new entity filings increase, so do employment numbers,” Hardin said. “So when you look at economic growth in Colorado, new entity filings are a leading indicator. Based on these numbers, we have a vibrant economy in the state right now.”
According to the report, new business filings in mid-2009 were fewer than 75,000.
“They’ve been steadily increasing since 2009,” Hardin said. “We have an influx of about 100,000 folks in Colorado every year, so I don’t see an end in sight.”
Asked how much the marijuana industry influences those new business filings, Hardin said, “There has been growth in that industry, for sure, so it has probably had some effect. But the numbers are too grand for it to be marijuana only.”
Wobbekind is surprised by the ever-increasing number of new business filings but also doesn’t see an end to the steady rise.
“I’m a little surprised the numbers are so high in a tight labor market,” Wobbekind said. “We have a good economic climate so some people are looking to start their own business even though they have job security in their current place of employment. We could see a slowing of growth with unemployment so low.
“But the national economy appears strong for at least another year. At this time, the national economy appears poised to continue the third longest expansion in U.S. history. We see few warning signs that could derail this trajectory over the next year. Colorado benefits from that, and Colorado’s economy is still holding strong.”