Colorado experienced a drop in the number of new corporations, nonprofits and other entities formed in the fourth quarter, a likely sign that job gains in 2020 will continue to slow, according to the Quarterly Business and Economic Indicators report from University of Colorado Boulder and Colorado Secretary of State Jena Griswold released today.
The report counted 28,371 new entities created, which marks a 0.4% decline from the fourth quarter of 2018. Existing filings declined 1.1% year-over-year and the number of dissolution filings, a measure of people throwing in the towel, rose 4.9%.
The number of limited liability companies, which make up the bulk of filings, rose 0.4%, although that is significantly down from the 4.3% compounded annual growth rate measured over the past five years. New filings are a measure of entrepreneurial energy in an economy, and as those companies grow, some will hire.
“While growth has slowed slightly the last two quarters, Colorado’s economy is still strong,” said Secretary Jena Griswold in comments accompanying the report. “With optimism from business leaders on the rise, indications point to Colorado’s economy staying strong in 2020.”
Colorado added 56,600 jobs in the first 11 months of last year and wages remain about $2,100 higher than the national average. But a tight labor market has hindered hiring, migration into the state appears to be slowing and building permits are down about 7.4% in the state, while the overall value of residential construction is down 3.8%.
“The slowing growth in new entity filings is consistent with the slower growth observed in both firms and employment in the state,” said Richard Wobbekind, executive director of Business Research Division at the Leeds School of Business at CU.
Trade disputes last year weighed on business confidence, which turned negative in the state, and higher interest rates in early 2019 put a damper on the housing market. But business confidence in Colorado rebounded late in the year and lower interest rates sparked a resurgence in metro Denver’s housing market in January.
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