Tag: Construction

Colorado Added 68,100 Jobs in 2013

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The Bureau of Labor Statistics recently released the preliminary employment revisions for 2013. The data showed that Colorado added 68,100 jobs in 2013, an increase of 2.9% compared to 2012.

  • Growth was led by Construction; Accommodations and Food Services; and Professional, Scientific, and Technical Services (PST).
  • None of the Supersectors lost jobs in 2013.
  • Several organizations were reclassified in the NAICS system during the year. They were moved from private health care and local government sectors to state government. This created artificial or structural levels of change for these 3 sectors.

The number of jobs added in 2013 was the 11th strongest year the state in terms of absolute job growth; however, it was only the 39th best year in terms of relative job growth.

After declines in employment in 2009 and 2010, Colorado added:

  •  36,300 jobs in 2011.
  •  54,400 jobs in 2012.
  •  68,100 jobs in 2013.

Job growth is expected to continue in 2014 at a rate similar to last year.

 

 

©Copyright 2011 by CBER.

SIngle Family Permits Being Added at Greater Rate than 1991-2005

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Improvement in the construction industry, as measured by single family permits, has contributed to the recovery from the Great Recession.

Looking back, the number of annual permits grew steadily from 1991 to 2006.

After bottoming out in January 1991 at 587,000 annual permits and the average number of permits added that year was 751,000. In September 2005, the number of permits peaked at 1,798,000 and the average number of permits added that year was 1,685,000. Over this period of 15 years months the average number of single family permits increased at an average annual rate of 62,233 units per year.

After the Great Recession hit, the number of monthly permits bottomed out at 379,000 in February of 2011. The average number of permits issues for 2011 was 420,000. In 2013  the number of permits increased to 614,000. For this two year period, permits are being added at an average annual rate of 97,208.

The story of the construction industry continues to be one of good and bad news.  Over the past two years, the rate of new single family permits being issued is greater than during the boom years. The problem is the greater recession created such a hole, it seems like there is little construction activity.

single family permits

©Copyright 2011 by CBER.

Construction Output Declined for Eleven Years – Reversed in 2012

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Real GDP for the Construction sector finally rebounded in 2012, after decreasing for eleven years, 2001 to 2011.

Between 1997 and 2012, the Bureau of Economic Analysis statistics show:

  • The annualized rate of growth for U.S. Private Sector Real GDP (sum of all states) was 2.3% and the U.S. Construction sector declined annually at a rate of -1.5%.
  • The compound growth rate for Colorado Private Sector Real GDP was 3.1%. The Colorado Construction sector declined annually at a rate of -2.4%.

For this period, the Colorado Construction sector was hit much harder than the U.S. In addition, the recovery was much slower for Colorado.

Between 2009 and 2012, the data shows:

  • The annualized rate of growth for U.S. Private Sector Real GDP (sum of all states) was 2.5% and the U.S. Construction sector increased at an annualized rate of 0.5%.
  • The compound growth rate for Colorado Private Sector Real GDP was 2.2%. The Colorado Construction sector declined annually at a rate of -1.4%.

Preliminary data suggests that 2013 Colorado Construction output will again be positive and that it will be stronger than the nation.


©Copyright 2011 by CBER.

Lack of Primary Job Creation May Slow Future Employment Growth

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The Bureau of Labor Statistics recently released data showing that, on average, Colorado added almost 62,000 jobs for the first four months of the year compared to the same period last year.

As has been the case in the past, the tourism and healthcare industries led the continued expansion.  The top five sectors for growth were:

  • Accommodations and Food Services
  • Healthcare
  • B-to-B (excluding Employment Services)
  • Retail
  • Construction

About 64% of the jobs added can be attributed to these sectors.

While it is good news that jobs are being added in most sectors, the expansion may be slowed by the lack of primary/high-tech jobs – jobs that create other jobs or bring in investment from the outside. The following sectors serve as a proxy for “primary job creation.”

  • Professional, Scientific, and Technical
  • Corporate Headquarters (MCE)
  • Manufacturing
  • Information

So far this year, these sectors are responsible for adding about 10% of the jobs.

All jobs are important and interrelated, but not all jobs are equal in terms of their ability to create other jobs.

A review of the Colorado economy after four months can be found by clicking here.

©Copyright 2011 by CBER.

Are We Better Off Than We Were Four Years Ago? – Colorado

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This election season has featured an abundance of discussion about where the state is better off now than we were four years ago. In some cases, we are better off today and in other cases we are not.  The following data provides a snapshot of key metrics that fit into both categories.

Colorado Population
People like to visit and live in Colorado. Continued population growth is projected on a long-term basis.
• Although Net Migration has slowed, Colorado’s population continues to grow at a steady pace.
Colorado Employment and Unemployment
Increased population growth points to long-term job gains and lower employment.
• During the 69 months between January 2007 and September 2012 Colorado only gained jobs in 34 months (seasonally adjusted data).
• In 2012, Colorado employment is well below employment of 2007 and 2008, but it is trending upwards.
• In 2012, jobs are being added at a faster rate than they were in 2008, but not 2007.
• The number of unemployed workers is more than twice as much in 2012 as it was in 2007. It is also greater than 2008.
• The unemployment rate in 2012 is twice the 2007 rate and much higher than in 2008.
• In 2012, the unemployment rate and the number of unemployed workers is trending downward, whereas, it was trending upward in 2008.

Colorado Employment by Sector
Segments of the economy are healthier than they were in 2008.
• Projected annual state employment for 2012 will be about 56,900 less than the total for 2008. The following sectors have greater 2012 employment than 2008: Private Education and Health Care, Higher Education, Tourism, K-12 Education, Corporate Headquarters (MCE), Federal Government, Employment Services, State Government, Extractive Industries, and Professional and Scientific and Technical Services.
Colorado Job Creation
Improved firm and job creation is necessary if the economy is to recover at a faster rate.
• Gross job losses and job gains for 2011 are less than 2008. Improvement in net job gains is more a result of decreased layoffs than actual job creation.

Income and Wages
Recent wage and income data is mixed.
• Per Capita Personal Income – The 2011 average is slightly below the value for 2008.
• Colorado Median Household Income – The 2011 median is below the value for 2008.
• Average Annual Wages – The 2011 average is above the value for 2008.

Colorado Output
Increased employment and wages will point to increased demand for goods and services. This in turn will push output upwards.
• Colorado Real GDP was greater than the U.S. for 2007 to 2011.
• The following sectors have shown steady growth since 1997 and 2011 output is greater than 2007 and 2008: Retail Trade; Professional, Scientific, and Technical Services; Health Care; Finance and Insurance; and Information.
• Real output for the Construction sector was greater in 2007 and 2008 than 2011 for both Colorado and the U.S.

Colorado and Inflation
Overall inflation has been minimal; however, inflation in key areas has been noticeable.
• Overall inflation has been minimal since the beginning of the Great Recession. Apparel and Housing are the only sectors that have grown at a lower rate than All Items for Coloradans.
Construction and Housing
There is improvement in the Construction and Housing markets.
• The number of permits in 2012 is greater than 2008, although they are well below the levels shown in the 2000s.  Most importantly, permits are slowly trending upwards.
• 2012 Colorado housing prices are approaching 2008 levels.
• Home ownership rates in 2011 are below the rates in 2008. More importantly, they are trending downwards.

General Fund and Retail Trade Sales
Gross General Fund Revenue is trending upwards because of stronger job gains (income taxes) and retail trade sales (sales taxes).
• Retail Sales are improving. Projected Sales Tax Revenue for the fiscal year ending June 2013 will exceed revenue for FYE 2008 (not adjusted for inflation). This tax accounts for about one-fourth of Gross General Fund Revenue.
• Projected Net Individual Income Tax for the fiscal year ending June 2012 will exceed FYE 2008 (not adjusted for inflation). This tax accounts for about two-thirds of Gross General Fund Revenue.
• Projected General Fund Revenue for the fiscal year ending June 2012 will match FYE 2008 (not adjusted for inflation).

For more detailed analysis of the state of the economy compared to four years ago, visit https://cber.co or click here.

 

©Copyright 2011 by CBER.

Goods Producing Sectors Poised to Add Jobs this Year

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Companies are divided into two categories: Goods Producing sectors and Service Producing sectors. In simplistic terms: you make stuff or you do stuff.

One of the reasons the Goods Producing category is important is that many primary jobs are in these sectors. The NAICS categories include the Extractive Industries, Construction, and Manufacturing.

Only twice (1997 and 1998) since 1990 have all three sectors added jobs in the same year. At the midpoint of 2012, the trio are in a position to show gains for this year also. Previously the gains were a result of an economy hitting on all cylinders. This time the gains will occur because of an economy that has misfired and the sectors have nowhere else to go but up. They are playing a small, but extremely important role in the recovery.

For additional details on the Colorado economy click here or go to https://cber.co/.

©Copyright 2011 by CBER.

Are Construction Jobs being Added Too Quickly?

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The lack of growth in the Construction sector and problems in the housing market are reasons for the lackluster recovery of the economy. In April, 2012 there were 117,900 Colorado Construction workers, virtually the same as in March 1997.

Over 57,000 construction jobs were lost as a result of the Great Recession and an oversupply of construction workers. The recovery has begun; however, only 9.8% of the lost jobs have been recovered.

By comparison, Healthcare and Higher Education did not experience a downturn. Tourism jobs dropped off slightly but have returned to pre-recession levels. The Extractive Industries; and Professional, Scientific, and Technical Services will reach 2008 peak levels later this year.

When all sectors are considered, about 55% of all lost jobs have been recovered.

It is great news that workers are being added to the payrolls, but does the state still have a surplus of construction workers?. This question is asked because the Construction sector should have a location quotient near 1.0 (the location quotient is a ratio comparing the local concentration of workers to the national concentration).

In January, 2012 the location quotient jumped to 1.23 and has remained near that level since. This means the state’s concentration of construction workers was about 23% greater than the U.S. average.

To put this in a historical perspective, the construction location quotient was less than 1.0 in 1990. It had dropped to this level because the state residential and commercial markets were overbuilt during the 1980s. The state experienced a housing bust and negative net migration for five years.

The strong expansion during the 1990s was supported by the increase in the number of construction workers. By January, 2000 the location quotient reached its peak at 1.46. Over the next 12 years, the number of construction workers declined relative to other sectors and the location quotient gradually dropped to 1.17 in August 2011.

The comparative lack of construction activity will probably prevent an oversupply of construction workers. For example office vacancies remain high enough that there is not demand for significant new construction. There is one major speculative office site being built-in Colorado; it is located in Broomfield.

Current activity appears to be in reaction to demand:
• There has been a greater need for multi-family units than single family housing, resulting in new apartments, condos, and townhouses in certain areas.
• There is demand for infrastructure improvements. Construction continues on FasTracks and improvements to the 36 Corridor are on tap for this summer. (It should be noted that different skills are needed for building houses and infrastructure).
• Finally, the expansion of the extractive industries drives construction activity, in areas such as the Niobrara shale field.

The good news is that jobs are being added. Hopefully they will increase at a rate that doesn’t result in an oversupply.

For a more complete update on the recovery of the Colorado economy, go to https://cber.co/.

 

©Copyright 2011 by CBER.

Warmer Weather – A Source of Job Creation?

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Recently, a local economist hypothesized that the recent strength of the Colorado economy was correlated with a warmer winter. The rationale for this hypothesis was that warmer weather may have benefitted outdoor sports such as golf courses, biking, rollerblading, and so forth. In addition, the economist surmised that retail sales would be stronger because warmer weather was more conducive to shopping and increased construction activity.

On one hand, the warmer weather theory sounded plausible because the weather “seemed” milder this winter, but on the other hand it sounded like it was full of hot air.

Premise 1 – The winter was warmer.
If heating degree days are the defining factor for how cold a winter is, then the period October 2011 through March 2012 was negligibly colder than the prior year. For this six month period, the most recent October, December, and February were colder, the two Novembers were similar, and January and March were warmer this year. (A larger number means it is colder, more heat is needed to heat a building).

October 2010         174 heating degree days
November 2010     645 heating degree days
December 2010     789 heating degree days
January 2011          925 heating degree days
February 2011        863 heating degree days
March 2011             513 heating degree days
Total                      3,909 heating degree days

October 2011          312 heating degree days
November 2011      636 heating degree days
December 2011  1,058 heating degree days
January 2012           763 heating degree days
February 2012         935 heating degree days
March 2012              364 heating degree days
Total                       4,068 heating degree days

Possibly it seemed warmer, because there didn’t seem to be snow on the ground that often. A comparison of snowfall for the metro area shows that there was 2.5 times as much snow this past winter as the prior year.

October 2010         none
November 2010    1.5 inches
December 2010    3.3 inches
January 2011         8.0 inches
February 2011       5.3 inches
March 2011            2.5 inches
Total                      20.6 inches

October 2011         8.5 inches
November 2011    4.5 inches
December 2011 16.5 inches
January 2012        4.9 inches
February 2012    20.2 inches
March 2012         none
Total                     54.6 inches

It is truly a shocker to learn that the past winter was actually colder and wetter than the previous year. The timing of the storms, the lack of wind, or some other factor must have created the perception that it was warmer this past winter.

Even with greater snowfall in the metro area, snowpack is below average and 95% of Colorado is reportedly in drought conditions. Two significant forest fires have occurred and summer hasn’t arrived.

Conclusion: Premise 1 is FALSE.

Premise 2 – The warm weather resulted in increased participation for local sporting activities.
There is no easy way to prove this. HOWEVER, the lack of snow in the ski country, at the right times, was in part responsible for diminished lift ticket sales – a decrease of more than 7%. Ouch that hurts! Not only did the lack of snow hurt ski business it will play havoc with rafting businesses this summer.

Conclusion: #2 Possibly true in the metro areas, FALSE in ski areas.

Premise 3 – Warm weather means stronger retail sales.
This is an interesting concept that is difficult to prove. Cold and snowy weather on key shopping days have reduced retail sales during past Christmas shopping seasons, but there is no evidence that warmer weather has increased trade sales. Retail sales are noticeably higher compared to a year ago, but that is attributed to more people working than last year at this time. And in some cases, sales are higher because retailers have finally been able to raise prices. Sales may be higher in the metro areas, but they are probably below expectations in the ski country because of reduced traffic.

Conclusion: #3 – Possibly true in the metro area, FALSE in ski areas.

Premise 4 – Warm weather means increased construction activity.
For the six month period October to March there were 114,500 construction workers this year versus 113,300 last year. Last June, the Construction sector finally bottomed out from the 2007 recession and has been slowly adding jobs since. The big boost of construction jobs in January is more likely a result of improved economic conditions than warmer weather.

Conclusion:#4 – Inconclusive.

One of the fun things about economics is dissecting “grassy knoll” or “warmer weather” theories to see if they are true, partially true, or false. In this case, it is highly improbable that the “warmer” weather was a source of net job creation. The gains in revenue at Denver golf courses, bike shops, and shopping malls were offset by losses on the ski slopes and sales in mountain t-shirt shops, hotels, and restaurants. The warmer weather will also result in a dismal rafting season and increased costs for fighting forest fires.

For a more complete update on the recovery of the Colorado economy, go to https://cber.co/.

©Copyright 2011 by CBER.

Construction Finally on the Uptick

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Construction was hit harder than most employment sectors during the Great Recession. For a number of years Colorado has had an oversupply of construction workers, relative to other industries. That has significantly lengthened the time of recovery.

Nationally, seasonally adjusted employment peaked in April 2006 at 7,726,000 workers. The number of workers declined with the Great Recession and appears to have bottomed out in January 2011 at 5,456,000. A total of 2,270,000 workers lost their jobs over that 57 month period. Since bottoming out, only 95,000 construction jobs have been added in 14 months.

There was a similar pattern for Colorado, but not as severe. Construction employment peaked in July 2007 at 170,100. It declined with the recession and appears to have bottomed out at 110,400. A total of 59,700 construction jobs were lost over this 47 month period. Since reaching bottom, 6,500 construction jobs have been added in nine months.

To put this in perspective, national tourism employment moved from peak-to-trough-to-peak in 50 months, while it took Colorado tourism employment 44 months to make the same journey. It has taken the Construction sector longer to go from peak-to-trough than it took the tourism industry to lose jobs and regain them.

On April 24, 2012 Aldo Svaldi of the Denver Post reported that the number of homebuilders in the state declined by 80%, a decrease of 2,903 to 616 builders.

Holy Moly Batman!

For additional information on the overall economy go to the cber.co website.

For additional information on the construction industry check out the cber.co report,Colorado’s Construction Industry – Impact Beyond the Hammers and Nails .

 

©Copyright 2011 by CBER.

U.S. 36 Project Paves Way for Economic Development

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The U.S. 36 corridor between Denver and Boulder is on the cusp of significant transportation investments. The $310 million Managed Lanes/Bus Rapid Transit Project begins in the spring of 2012 and will be the largest Colorado Department of Transportation project in the state for the next few years. It is expected to generate 2,400 direct jobs.

The first phase of funding will add multimodal elements to 10 miles of U.S. 36 from Pecos Street to Interlocken Loop, including:
• HOV/HOT lane in each direction;
• Bus rapid-transit service;
• Corridor-wide bikeway: and
• Replacement of Lowell Boulevard, 112th Avenue, and Wadsworth bridges.

The Colorado High Performance Transportation Enterprise is concurrently defining developer interest to complete the second phase of the project to Table Mesa in Boulder. Potentially, the entire corridor project could be completed by July 2015.

Over the next 24 years, employment is expected to increase by 53% and population will grow by 28%. As anyone who has traveled 36 can testify, improvement of the corridor is essential for better access to commerce in the northwest metro region.

The above information has been provided by 36 Commuting Solutions in a  recent press release.

©Copyright 2011 by CBER.