Tag: Economy

Colorado Economy Remains on Solid Footing

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The most recent data release by the Bureau of Labor Statistics showed the Colorado economy remains on solid footing.

The unemployment rate dropped from 6.2% a year ago to 4.0% this year. That sharp of a drop produces significant shock within the system, more so than when the change is more gradual.

With that sharp of decline, it becomes difficult to find workers in some occupations. That difficulty will be accentuated by a sense of urgency to find workers. As well, more industries will face upward wage pressures. That is good for workers, but will cut into the bottom line of companies.

The recent jobs data is another indicator the Colorado economy is continuing to grow at a steady pace. For all practical purposes, it is meaningless to talk about the December numbers. When BLS makes their annual revisions in March, it is likely the number of Colorado jobs will be revised upwards.

The U.S. economy is solid which bodes well for Colorado. New car sales have returned to pre-recession levels, real GDP will be stronger this year both globally and for the U.S., the U.S. should add more than 2.6 million jobs this year (and Colorado should be at least 2.7% of that total), government spending will be stronger, and purchasing managers in manufacturing and service companies are optimistic.

In Colorado, BLS data will show that the number of establishments increased at a greater rate than in 2013. If there are more businesses there are more potential job opportunities for workers.

In 2015 about 60% of job growth will be in construction; health care; accommodations and food services; retail trade; and professional and technical services.

Admittedly, the price of oil will have an effect on the rate of job growth in 2015; however, at a statewide level, most of the top sectors will show steady growth unless the price of oil stays low for an extended period.

The steady growth that is currently occurring in the Colorado economy is much easier to manage and deal with than the rapid growth the state experienced during the 1990s.

cber.co 2015 Colorado Economic Forecast by Category

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The primary focus of most state economic forecasts is to project total state employment.

Some economists also produce sector forecasts. They usually add projections for the sectors to derive the state total, an approach that introduces numerous variables for error.

cber.co feels the most accurate forecast is achieved by projecting total employment based on projections for categories of sectors. Sectors are grouped into three categories based on their past performance.

Projections for the categories and overall employment are based on trends, feedback from business leaders, economic developers, and other economists. The sum of these categories is then compared to the projections for overall total employment.

Minor adjustments are made and the final forecast is produced for three scenarios. The most likely scenario is used as the final cber.co forecast. This final step helps create a better understanding of upside and downside risk associated with the forecast.

This portfolio approach has made it easy to see that some sectors consistently create jobs at a higher rate of growth, some show solid growth, and others are more volatile. Ultimately, the volatile category tends to have a greater influence on the amount of change in total job growth than the sectors with steady growth.

In 2015, the growth of the Strong, Solid, and Volatile Growth Categories will be similar to 2014.

The Strong Growth Category of sectors (green) has performed consistently over time. The category added jobs as expected in 2014. The larger sectors (Health Care, PST, and B-to-B, excluding Temp. Services) grew at a rate faster than the state. Arts, Entertainment, and Recreation, a smaller sector, grew faster than the state.

Recent and projected employment changes for the Strong Growth Category follow:
• 2012 24,000
• 2013 20,000
• 2014 20,900
• 2015 20,000 to 24,000

Over time, the Solid Growth Category of sectors (yellow) has been more volatile than the Strong Growth Category. In 2014, this category performed stronger than anticipated. AFS and K-12 Education expanded at a faster rate than the state.

Recent and projected employment changes for the Solid Growth Category follow:
• 2012 15,600
• 2013 27,600
• 2014 25,200
• 2015 24,000 to 28,000

Finally, the Volatile Category of sectors (red) was a significant source of growth in 2013 and 2014. In 2014 the Construction, Employment Services, Transportation and Warehousing, and the Extractive Industry sectors expanded at a faster rate than the overall state average.

Recent and projected employment changes for the Volatile Category follow:
• 2012 15,100
• 2013 19,800
• 2014 25,600
• 2015 23,000 to 27,000.

In 2015, overall state employment will increase by 2.8% to 3.0% or 70,000 to 76,000 jobs. Average Colorado employment will be 2,525,600 for 2015.

For additional information about the 2015 cber.co Colorado Economic Forecast click here.

Colorado Economic Forecast

Colorado Employment to Continue at Steady Pace in 2015

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Later this week, cber.co will release its Colorado economic forecast for 2015. The primary focus of the Colorado forecast is employment within the state. As economic developers say, “it all starts with a job.”

Each year the forecast provides an optimistic, pessimistic, and most likely scenario.

The 2015 optimistic scenario calls for:
• U.S. Real GDP growth will be greater than 2.9%.
• Colorado will add more than 76,000 workers.

The projected likelihood of this scenario is 15%. The Colorado economy has experienced solid job growth since 2012; however, there is nothing to believe that it will experience growth at a significantly greater rate during 2015.

The pessimistic scenario calls for:
• U.S. Real GDP growth will be less than 2.5%.
• Less that 70,000 Colorado workers.

Unfortunately, there is more downside risk to the forecast than upside risk. The projected likelihood of this scenario is 30%. While the global and U.S. economies are expected to see slight growth in output, the Colorado economy could be derailed if the price of oil remains below $65 per barrel (the estimated breakeven point for the Niobrara Oil field) for an extended period.

The most likely scenario calls for:
• U.S. Real GDP will be 2.5% to 2.9%.
• The U.S. will add at least 2.6 million workers.
• Colorado will add 3.0% of total U.S. jobs added.
• Colorado will add 70,000 to 76,000 workers, job growth will be 2.8% to 3.0%.

Despite downside risks associated with lower prices for oil and reduction production in Colorado there is a 55% likelihood this forecast will occur. Since 2012 growth has been steady and broad-based. Much of the growth has been in sectors such as tourism, which have an indirect link to the extractive industries.

Average Colorado employment will be 2,525,600 for 2015.

For additional information about the 2015 cber.co Colorado Economic Forecast click here.

Colorado Remains on Track to Add at Least 71,000 Jobs in 2014

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The state remains on track to add at least 71,000 jobs this year.

The BLS released their monthly employment report for Colorado earlier today. Rather than prepare a sector-by-sector analysis, the following comments evaluate the situation from 30,000 feet.

Colorado has had the perfect winter – snow in the mountains, but not so much that people couldn’t get to there to spend their money and ski. The state has had an excellent ski season which bodes well for hospitality industry employment. Good snow also means good rafting for the summer season.

A strong ski season also bodes well for the construction industry. Nationally, hotels and resorts had delayed repairs and expansions because of the recession. Upgrades and new construction that have been on hold are likely to occur in the months ahead.

A trip to DIA shows the importance of tourism to the state. Progress is being made on the Westin hotel located at the south end of the terminal. As well there are signs the light rail will soon be a reality. That will make it easier for travelers to connect to the metro area, which will further enhance Denver’s image as a place to hold conventions and conduct business.

It also appears the Gaylord project has cleared its latest set of hurdles and will begin construction soon. Shuttle drivers are anxiously telling their passengers where the project will be located.

The fact that Denver is on the short list for the Republican National Convention speaks to the increased reputation Denver is gaining as a place to host conventions. The fact that Colorado is a blue/purple state makes it an even more attractive destination. Wouldn’t the Republicans love to unseat the Democrats at a convention held in the Democrat’s backyard?

The snow and the cold of the winter season have not stymied construction along the Front Range. The state added over 10,000 construction jobs in 2013. Job growth has continued to be strong in 2014. Moving forward, the industry may be challenged to find sufficient workers, as unemployment in the industry has decreased substantially.

The construction industry will remain strong, with most of the growth coming from private sector investment. Despite improvement in tax revenues, the public sector is still not in a position to fund construction – such as schools or institutions.

Road construction has been held back by limited tax collections. One downside to improved fuel efficiency is less fuel is being consumed. The tax rates have not increased to support maintenance and repairs to our transportation infrastructure.

Residential construction will continue to improve, but will not approach the rates of growth that occurred prior to the Great Recession. For a variety of reasons, multifamily growth will remain strong. For example, young buyers prefer to live in the metro areas vs. the suburbs and many of them have high debt levels.

Obamacare enrollment has finally come to a close. For better or worse, the program is officially moving forward and healthcare organizations have greater clarity about how they can operate. They will be challenged by thin margins and will have to constantly be on top of their operations to remain profitable.

The industry continues to evolve rapidly. For example a focus for many organizations is bringing health care to local neighborhoods through urgent care and emergency facilities. The ACA will drastically impact the way healthcare organizations deliver services.

The oil and gas industry will continue to be extremely strong in Northern Colorado. In 2013 the state produced 64 million barrels of oil and about 80% was produced in Weld County. Colorado is one of the country’s top 10 states in terms of oil reserves. There are smaller counties that have enjoyed growth in oil production because of the Niobrara oil field, i.e. the industry is benefitting many parts of the state. Finally, the natural gas industry is strong on the western slope.

The state remains on track to add at least 71,000 jobs this year.

 

Number of Colorado Business Establishments Remains Well Below 2007 Peak

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The Bureau of Labor Statistics tracks the number of business establishments as well as the number of employees. An establishment is defined as a single physical location where business is conducted or where services or industrial operations are performed. By contrast, a firm is comprised of establishments.

The number of Colorado business establishments peaked at 180,934 in Q3 2007. As a result of the Great Recession, the number of Colorado business establishments declined to 168,939 in Q1 2011.

There has been steady growth in the number of business establishments since bottoming out in 2011; however, it will be several more years before a return to the 2007 peak. In other words, the effects of the Great Recession are still being felt despite the state’s job recovery.

The number of business establishments in Colorado remains below the 2007 peak.
The number of Colorado business establishments remains below the 2007 peak.

©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.

ADP Report – Mid-Size Companies Adding The Most Jobs

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ADP announced that the U.S. private sector added 175,000 jobs in January. The data shows mid-size companies adding the most jobs.

Since the official end of the Great Recession the ADP data shows the private sector has added 7,418,000 jobs.

The number of jobs added by company size category follows.

1 to 19 employees

  • 1,477,000 jobs added.
  • 19.9% of total jobs added.
  • 25.9% of private sector jobs.
  • 5.2% growth since the end of the recession.
    (See chart below for jobs added since the end of the recession).

20 to 49 employees

  • 1,191,000 jobs added.
  • 16.1% of total jobs added.
  • 15.9% of private sector jobs.
  • 7.0% growth since the end of the recession.

50 to 499 employees

  • 2,674,000 jobs added.
  • 36.0% of total jobs added.
  • 35.6% of private sector jobs.
  • 7.0% growth since the end of the recession.

500 to 999 employees

  • 474,000 jobs added.
  • 6.4% of total jobs added.
  • 6.9% of private sector jobs.
  • 6.4% growth since the end of the recession.

1,000+ employees

  • 1,602,000 jobs added.
  • 21.6% of total jobs added.
  • 15.8% of private sector jobs.
  • 9.7% growth since the end of the recession.

Jobs have been added across all size categories. The data show the following:

  • Well-established large companies (1,000+ workers) have added jobs at the fastest rate, 9.7%.
  • The 50 to 499 category has added the highest percentage of jobs 36.0%.
  • The 50 to 499 category is the largest category, 35.6% of private sector jobs.
  •  The 50 to 499 category has added the greatest number of jobs, almost 2.7 million.

The most encouraging news is the recent increase in the growth of smaller companies.
Mid-size companies adding the most jobs

©Copyright 2011 by CBER.

cber.co Colorado Economic Forecast for 2014 – 68,000 to 74,000 Jobs to be Added

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In 2013 the state experienced natural disasters and self-inflicted political wounds, yet Colorado employment grew at a faster than expected rate. The cber.co economic forecast points to continued expansion  for 2014.

On a Positive Note…

  • The state population grew at a higher rate than expected in 2013. Stronger growth is on tap for 2014.
  • The story is the same for employment. In 2013, the state added approximately 68,000 workers and will add another 68,000 to 74,000 in 2014. This represents job growth in the rage of 2.9% to 3.1%.
  • Unemployment will continue to decline, and will be in the range of 5.5% to 5.8% at the end of 2014.
  • In 2013 consumers were delighted that gasoline prices declined. At the moment there is no reason to believe they will rise precipitously (knock on wood).
  • Colorado new car registrations have risen steadily for the period 2010 to 2013. A decline is unlikely in 2014.
  • Colorado’s general fund, particularly sales and income taxes, has been a benefactor of increased population, employment, and wages. Likewise the revenue for city and county governments has improved.

Some Mixed News…

  • Per Capita Personal Income will increase by 3.7% in 2014.  This is slightly less than the rate of growth for the U.S. Over the past two decades the gap between the U.S. PCPI and the state PCPI has closed significantly.
  • In 2014, Colorado inflation will be 3.0%, well above the rate for the U.S.
  • In Colorado, housing prices have increased at a faster rate than the nation. That is great news for home owners, but not so good news for people wanting to enter the housing market.
  • The Construction Sector is slowly improving.  Increased building activity supports growth in multiple sectors and causes greater congestion on the highways. For some, the latter is not desirable.
  • Although the state returned to 2008 peak employment, it will be a long time before the state returns to the 2007 peak number of establishments.

Looking ahead, the economy will build on the foundation established in 2013. Hopefully the state’s leadership will be less dysfunctional.

Click here to review the cber.co forecast and other economic reports.

cber.co forecast

©Copyright 2011 by CBER.

Jobs and Output Data Point to Stronger Growth for Colorado

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Earlier today, the Bureau of Labor Statistics released November jobs data for Colorado. As measured by increased jobs and decreased unemployment, the update showed the improvement in the economy is geographically broad-based. Most states are enjoying the recovery!

Specifically the highlights from the jobs data are:

  • Wage and salary employment increased in 43 states and decreased in 7 states and the District of Columbia.
  • Decreased unemployment rates were recorded in 42 states and the District of Columbia compared to a year ago, 1 state was flat and 7 states were higher. Nationally, November unemployment registered 7.0%, down 0.8 percentage points from a year ago.
  • In Colorado the November unemployment rate was down 1.1 percentage points from the same time last year (7.6% compared to 6.5%).

A stronger national economy bodes well for Colorado.

Earlier in the month the Bureau of Labor Statistics indicated its projection models had understated the rate of job growth in the state in 2013. Latest estimates project the state will actually add 60,000 to 65,000 jobs this year.

More good news came today when the Bureau of Economic Analysis revised Q3 GDP upward to 4.1%. Exports and business and consumer spending were stronger than anticipated.

The stronger jobs and output data suggest the impacts of sequestration, the partial government shutdown, and the fallout from the earlier budget and debt ceiling debates may have had less of a net impact than originally thought.

For the first time in 6 or 7 years, Colorado and the U.S. will be entering a new year with a solid foundation for growth. If that foundation remains in place, there is reason to believe that Colorado will add at least 65,000 jobs in 2014.

©Copyright 2011 by CBER.

Colorado Jobs Data for October – Mixed Message

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The recent BLS jobs report for Colorado had mixed news.

The good news is that Colorado will see solid job growth this year. The bad news is that jobs are being added at a slower rate than earlier in the year.

On the street, most Colorado business owners are not pleased with government leadership, but they are generally upbeat about the economy.

The unemployment rate was flat from February through August. The slight declines in September and October are a sign that the rate continues to slowly move downward. BLS reports the state rate is lower than the rate for the U.S.; however, it is not statistically different than the U.S. (The latest state rate is 6.8% compared to 7.3% for the U.S.)

On a positive note, the number of unemployed workers has fallen to 185,500. This is the lowest number of unemployed since February 2009; however, it is more than twice the pre-recession number.

The wage and salary data is mostly positive. The average number of jobs added for the first 10 months of 2013 is about 56,400 greater than the same period last year. Unfortunately, jobs have been added at a declining rate since March.

Colorado is on track to add about 55,000 jobs for 2013, an increase of 2.3%. The question is, “Given this downward trend in the number of jobs being added, what lies ahead for 2014?”

All jobs are important; however, there is concern there are too few jobs being added that “create” other jobs or bring in wealth from the outside. The lack of a sufficient number of new primary jobs may be the reason for the decreasing rate of growth. State and local economic developers are working hard to address this issue.

It is unlikely the state numbers were noticeably impacted by the September flooding and the limited Government shutdown. The flooding clearly had a negative impact on the local economies and the limited government shutdown may have caused inconvenience for cities and companies that are heavily dependent on federal funding. These events will likely have a greater impact on overall output than employment.

For the most part, the latest jobs report bodes well for the state.


©Copyright 2011 by CBER.